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SR 11-01-2011 4B
I City of City Council Report Santa Monica City Council Meeting: November 1, 2011 Agenda Item: `b To: Mayor and City Council From: Dean Kubani, Manager — Office of Sustainability and the Environment Subject: Strategy For A Sustainable Local Economy Recommended Action Staff recommends that the City Council: 1. Review and comment on the Strategy for a Sustainable Local Economy; and 2. Direct staff to proceed with implementation of the Strategy for a Sustainable Local Economy. Executive Summary The Strategy for a Sustainable Local Economy (SSLE) was originally recommended by the Sustainable City Task Force in Phase 1 of the Sustainable City Implementation Plan approved by Council on October 24, 2006. Consultants with Earthvoice Strategies began work in the summer of 2008 on the SSLE. The SSLE was developed with input from City staff, community organizations and members of the public. It was reviewed by staff from the Office of Sustainability and the .Environment, Planning and Community Development, Finance, and Housing and Economic Development, and the final SSLE was completed in spring 2010. The SSLE includes six primary recommendations that integrate resource conservation and economic vitality in an effort to continue Santa Monica's leadership as a leading sustainable community. These strategies focus on greening existing businesses, attracting and retaining sustainable businesses and maximizing reinvestment in the local economy by both businesses and residents. The six primary recommendations are to: 1) Create a Sustainability Partnership with Business; 2) Develop a Sustainability Center; 3) Implement High Impact Strategies; 4) Maximize Local Purchasing; 5) Green Commercial Infrastructure; and 6) Market Sustainable Santa Monica. Staff requests Council review and comment on the SSLE and provide direction to proceed with implementation of the SSLE. 1 Background The Strategy for a Sustainable Local Economy (SSLE) was originally recommended by the Sustainable City Task Force in Phase 1 of the Sustainable City Implementation Plan approved by Council on October 24, 2006. Consultants with the firm Earthvoice Strategies began work on a multi -part SSLE in the summer of 2008. The development of the SSLE was carried out in three phases. The first phase reviewed where the City was currently in terms of economic development and the progress made with sustainability implementation. The second phase defined key sustainability goals. The third phase set out recommended strategies for achieving established sustainability goals. The draft SSLE was developed with input from City staff, community organizations and members of the public over a one year period from July 2008 to June 2009. More than 45 people participated in three focus groups that were held during this time. The draft SSLE was delivered on June 29, 2009 and reviewed by staff from the Office of Sustainability and the Environment, Planning and Community Development, Finance, and Housing and Economic Development. Presentations were given to the Sustainable City Task Force, Task Force on the Environment, Sustainability Advisory Team and the Leadership Team. Feedback from these groups was integrated into a final SSLE that was completed in spring 2010. Discussion Contents of each of the three sections of the SSLE are described below: Section I, "The City's Current State ", identifies Santa Monica's characteristics and sustainability practices and compares them to other communities in California and the United States, models some key environmental implications of the city's economic base, and positions the city in the regional and global contexts by which it is shaped. Section II, "Desired Outcomes ", identifies what a sustainable local economy in Santa Monica could look like and recommends a mix of business types and sectors consistent with the I±' Sustainable City Plan (SCP), the LUCE, and regional and global trends affecting Santa Monica's local economy. This section includes an analysis of the economic development indicators in the SCP and makes recommendations for updating these indicators when the SCP is updated in the Spring of 2012 with goals, indicators and targets for 2020. It also considers the city's fiscal, social and environmental sustainability in order to develop a framework of nine principles for determining an optimal mix of business sectors. The nine principles that determined the optimal mix of business sectors include: 1. Focus on attracting sectors that generate high revenues relative to their use of land, including: a. Information b. Professional, scientific and technical services c. Accommodation and food services d. Arts, entertainment and recreation e. Health, social and education services f. Retail trade g. Finance, insurance, real estate. 2. Give high priority to the retail and accommodation /food industries because of their disproportional importance to the City's fiscal sustainability. 3. Amend the LUCE recommendations with. regard to creative industries or local serving office uses to consider financial and insurance companies that serve regional markets as local serving and require all office uses classified as ,.creative industries or local serving" to meet minimal sustainability standards. 4. To enhance economic sustainability, attract businesses from a mix of different sectors, with diversity within sectors that serve a mixture of local, regional and global markets. 5. Work to maintain the city's balance of large and small firms, and develop different policies to address businesses of different sizes, and to maximize synergy among businesses of different sizes. 6. Consider "local- serving" businesses as those types of businesses that contribute to the city's sense of itself, particularly in the areas of arts /creativity and sustainability, and /or contribute to Santa Monica's uniqueness as a retail and tourist destination. 7. Continue to examine options to increase workforce housing in Santa Monica. 8. When targeting businesses for attraction, while taking into account the resource consumption /pollution generation of sectors, focus more on sustainable processes and services rather than green products. 3 9. Fine tune and focus the criteria used for the Sustainable Quality Awards for identifying firms to be targeted for relocation to Santa Monica. In order to develop these nine principles, a comparison by economic sector was completed using five measures: fiscal revenue generated, business license tax contributions, wages, water consumption and building energy use. The findings of this comparison are reflected in the table below: Figure 1: Comparison of Revenues, Wages and Resource Intensity Q.I Revenues' Low [dumtbnal servtes Q.3 Wage High 4.flran a and Insuranae• ArMEntertainmem, and Recreation Real Estate and - Rmtaland leasing $ commcdatbn .. d Food Services $ Low `+tofessbnatSCkMifl4 Jnfamatlom' andTe hnl al Services $ Assistance Q.G Revenues HIGH ietailmde$ "Average incase M awllablefrom cenRIs2002 data. income based onthecay ofSa maMonM oppMunues and challenges repon,pR -F.3 �R Ro revenue data twslabie, Placement is based on census 2002 Publishing industry revenues (submctor! oily wrofesdonswlth Incsme meiedtoafford Santa Mono WARR $et,Wgareabove x ails 12002 Cersus datsby sector Refiedstotal sales, recelpts orshlpments bysecmr Q.`P Legend clyde size Is relativem electrical and natural gas consumption relative to sales, recelpts or shipments bysecto,(2oa2 Eo omlcCensus andTable2a and 29). !sargercirdelmpheshgh use,mediumcklelmplles medium useand small dRk Implies bssusa. it lsassumed Information and nnanoe and instance sectors have similarenergyusage rattemstothePrcf ssio* sciemiAc and 7echnsol Services secmr. $ sectoisoithhighbusinessbcm %uxcontributionsoxal2ooet" Circle nine Isrelattcebowatercansumpaon tosaks,receipts or shlpmemsbysedor (2002 Kona l— Census} 40impikshigh waty user,• implies medium water user and implies lowwateruser. whiteclyde burr sectors with no data available. 0 Section III, "Roadmap to Sustainability ", builds on the findings and recommendations developed in Sections I and II and includes a series of recommended strategies to attract and retain sustainable businesses that meet the principles outlined above, green existing businesses, and maximize reinvestment in the local economy by both businesses and residents. The six recommended strategies include 1. Create Sustainability Partnership with Business: Develop a strong, long -term sustainability partnership with the private sector. 2. Develop Sustainability Center: Develop and grow a high profile physical presence in the city, outside City Hall, that offers sustainability- related services and information that can grow to become a hub around which firms offering sustainability- related goods and services might naturally cluster. 3. Implement High Impact Strategies: Work with the private sector to develop and implement sustainability strategies for key sectors with high potential for reducing Santa Monica's ecological footprint. 4. Maximize Local Purchasing: Identify specific opportunities to increase local purchasing and green supply chains, particularly at the retail level, followed by an intensification of "buy local" efforts to plug gaps and promote green purchasing opportunities. 5. Green Commercial Infrastructure: Develop a long -term .approach to "greening" new and existing commercial buildings.. 6. Marketing Sustainable Santa Monica: Develop and implement a plan to market Santa Monica to the businesses and visitors it seeks to attract by capitalizing on its sustainability brand. There are costs, estimated at $585,000 by the consultants, to implement the six strategies identified in the SSLE. However, staff has been proactive in integrating SSLE strategies into existing efforts and has made significant achievements towards achieving a sustainable local economy using existing staff and resources. Efforts underway to implement the six recommended strategies include: 1. Create Sustainability Partnership with Business: Develop a strong, long -term sustainability partnership with the private sector. 5 a. The Santa Monica Alliance: Founded in 2010, the Santa Monica Alliance is a collaborative effort of the City of Santa Monica and the Santa Monica Chamber of Commerce dedicated to nurturing a vibrant, healthy and profitable business climate by attracting, retaining and helping grow businesses. Business outreach includes welcome packs, Ambassador Committee visits and one -to- one assistance. The Santa Monica Alliance launched the Passport to Santa Monica and a new website (www.SantaMonicaAlliance.com) and have assisted over a dozen existing businesses with issues ranging from permitting to signage to employee benefits, community engagement and marketing support. The Santa Monica Alliance been instrumental in successfully retaining large and small employers in Santa Monica. b. Sustainable Quality Awards: The Santa Monica Chamber of Commerce, the City of Santa Monica, and Sustainable Works developed the Sustainable Quality Awards to identify and recognize businesses in the Santa Monica area that are successfully incorporating sustainable practices into their operations. Since the award was created in 1995, 95 businesses have been recognized for their achievements. The Sustainable Quality Awards have provided a catalyst for further sustainability innovation throughout the Santa Monica business community. c. Arts Earth Partnership: The Arts Earth Partnership is an official green certification for cultural facilities, theaters, museums, dance studios, art galleries, performing arts companies and individual artists. The certified .artists and facilities form a coalition collectively committed to achieving environmental sustainability. The Office of Sustainability and the Environment and the Cultural Affairs Division created a scholarship program to offset the cost of certification for Santa Monica art and cultural facilities. To date, four Santa Monica facilities have been certified. 2. Develop Sustainability Center: Develop and grow a high profile physical presence in the city, outside City Hall, that offers sustainability- related services and information that can grow to become a hub around which firms offering sustainability- related goods and services might naturally cluster. a. Sustainability at the Airport: Phase I of a comprehensive public visioning process regarding the future of the Airport identified the Santa Monica Airport as a possible location for a future Sustainability Center. This option will be further discussed in Phase II'. In 2011, the City launched the Airport Avenue Demonstration Gardens highlighting best practice in sustainable landscaping and local businesses. C:9 3. Implement High Impact Strategies: Work with the private sector to develop and implement sustainability strategies for key sectors with high potential for reducing Santa Monica's ecological footprint. a. Business Greening Program: The Sustainable Works Business Greening Program helps businesses green the bottom line by helping businesses save money and resources through increased efficiency and employee education. Businesses are provided with the necessary tools to implement environmental actions and policies. To date, more than 155 Santa Monica businesses have completed the program. b. Green Business Certification: The Santa Monica Green Business Certification Program was created in 2005. It is a collaboration between the City of Santa Monica, Chamber of Commerce, Convention and Visitors Bureau, Sustainable Works and the Small Business Development Center to certify and recognize green businesses in the Santa Monica Community. This voluntary program encourages businesses to implement proactive actions that are good for the bottom line and the environment. To date, 69 businesses have received certification. c. I Am Santa Monica: "I Am Santa Monica" is an interactive program of the Santa Monica Convention and Visitors Bureau designed to encourage and empower Santa Monica businesses and their employees to become better informed about Santa Monica and all it has to offer. To date, more than 2,000 people have participated in the program. d. Information Systems: The City's fiber optic network, which previously leased dark fiber to businesses, started offering 10 Gb /s broadband, which helped attract new tech and media companies. Eight new businesses leased dark fiber. Eleven new "lit fiber" connections were made between local businesses and ISP providers. Additionally, the City's free WiFi network is being extended to each commercial district in Santa Monica which benefits local businesses and consumers. 4. Maximize Local Purchasing: Identify specific opportunities to increase local purchasing and green supply chains, particularly at the retail level, followed by an intensification of "buy local" efforts to plug gaps and promote green purchasing opportunities. a. Buy Local Santa Monica: Buy Local Santa Monica was created by representatives of the Santa Monica business community and the City of Santa Monica to support local businesses and raise awareness of the community, economic and environmental benefits of choosing local first. To date, 392 businesses that employ 1,916 SM residents have joined the program. This year Buy Local Santa Monica is focusing on the development of policies and programs to support and enhance business -to- business purchasing in the community. If1 b. Buy Local Market: Buy Local Market (www.buVIocalmarket.com) is a web - based Santa Monica business committed to making buying local easy, fun and affordable. Buy Local Market works with the business community in Santa Monica to help promote local businesses to residents by offering information about deals, news and events around town. c. Local Bid Purchasing Preferences: In 1999, the City adopted a 1% bidding preference for Santa Monica businesses when submitting bids for city contracts. The 1 % figure reflects the portion of the State sales tax that the City receives from business conducted locally, which can have the effect of reducing contract costs to the City. This preference was enacted in order to save tax dollars as well as to support local businesses. Purchasing goods and services locally contributes to sustainable economic development by reducing environmental impacts related to transportation, employing local residents, and redistributing City funds back into the community. Council has directed staff and the City Attorney's Office to research opportunities to increase the bidding preference to reflect the increase in sales tax that the City retains as a result of Measure Y. This issue is on the November 1, 2011 Council agenda as item 4 -C. d. Local Hiring: On July 26, 2011, the City Council conducted a study session to hear what other communities do to encourage hiring of local residents in development projects. Staff presented information about the efforts of several other cities, including Berkeley, Los Angeles, Pasadena, San Francisco, Richmond and Milwaukee, Wisconsin. A common element in all of these communities' programs was a First Source Hiring program whereby local residents are given an opportunity to apply for jobs before recruitment is opened to the general public. Based on the labor characteristics of Santa Monica, Council asked staff to return with recommendations to implement a first source hiring program for construction jobs in City- funded public works projects, and for permanent employment in private development. Staff plans to return to Council in early 2012 with a proposed ordinance. 5. Green Commercial Infrastructure: Develop a long -term approach to .,greening" new and existing commercial buildings. a. Land Use and Circulation Element: On July 1, 2010 the framework Land Use and Circulation Element (LUCE) of the City's General Plan was unanimously approved. The plan incorporates the community's values of conservation, environmental responsibility, and social equity. It proposes reductions in vehicle trips, promotes bicycling, walking and carpooling, and places new projects near transit hubs. b. Solar Santa Monica: Solar Santa Monica is helping the City achieve its energy independence goals. The program helps residents, businesses and property owners save energy through energy efficiency upgrades, and 8 then helps them produce energy using a clean, reliable solar system. Since its inception, 2,674 kW of solar PV has been installed at 335 solar PV sites citywide. c. Green Building Ordinance: The City of Santa Monica has a commitment to protecting the environment, improving quality of life, and promoting sustainability. In order to fulfill this commitment, the City has established performance standards that new construction projects must meet. These requirements institutionalize best practices to reduce the environmental impacts associated with buildings. d. Community Solar Fund: In May 2011 staff issued a Request for Information for the development and management of a Community Solar Fund. The Fund would provide preferential interest rate financing for solar systems throughout the community on public buildings, institutions, commercial and even residential property, with the primary intent of significantly increasing the installation of solar energy systems in Santa Monica. Based on the input received from interested contractors, staff is preparing an RFP which will be released later this year to establish the Community Solar Fund. 6. Marketing Sustainable Santa Monica: Develop and implement a plan to market Santa Monica to the businesses and visitors it seeks to attract by capitalizing on its sustainability brand. a. Santa Monica Convention and Visitor Bureau: The Santa Monica CVB proactively markets Santa Monica and its sustainability successes using SantaMonica.com, eNewsletters, social media, the Official Visitors Guide and the Corporate Travel & Meeting Planner. In 2011, Santa Monica CVB erected a "Mobile Visitor Center" to allow for additional visitor services throughout the community and at special events: The natural choice was a Hybrid vehicle. The Santa Monica CVB regularly hosts visiting journalists from around the world, making sure that Santa Monica's sustainability efforts are included in messaging and itineraries. Specific highlights include the farmers market visits, solar- powered ferris wheel and green certified hotels /restaurants. Of the specific recommended strategies included in the SSLE, staff has been able to complete or initiate substantial work on a majority of the strategies . with existing staff and funds or as part of other Council approved projects. These efforts have been undertaken in order to attract and retain sustainable businesses that meet the principles outlined above, to green existing businesses, and to maximize reinvestment in the local economy by both businesses and residents. 9 The remaining recommendations that have yet to be implemented include: • Sustainable business hub (Strategy 2: Sustainability Center) • Green supply chains (Strategy 3: High Impact Sector Strategies) • Create a local business baseline (Strategy 4: Maximize Local Purchasing) • Plug retail leaks (Strategy 4: Maximize Local Purchasing) • Sustainable in fill big box development (Strategy 4: Maximize Local Purchasing) • Building energy retrofit ordinance (Strategy 5:Green Business Infrastructure) Implementation of these recommendations would require new programs and additional funding. Costs would be dependent on the specifics of the program or policies. Staff finds that current efforts to implement the SSLE are having the greatest impacts within existing resources. If Council directs staff to move forward on implementation of the remaining recommendations, additional resources and staffing would be necessary, or current work efforts would need to be curtailed. Staff would explore the resource implications of pursuing additional recommendations and would return to Council with programming recommendations, costs, trade -offs, and other implications. 10 Financial Impacts & Budget Actions There are no financial impacts associated with reviewing and commenting on the Strategy for a Sustainable Local Economy. Additional financial impacts would be associated with implementation of additional programs or policies. Staff would return to Council with a specific proposal to implement any program or policy that has associated financial impacts. Prepared by: Shannon Parry, Principal Environmental Analyst Approved: Aleanubani Director, Office of Sustainability and the Environment Forwarded to Council: Rod Gould City Manager Attachment A- Strategy For A Sustainable Local Economy 11 Earthvoice Strategies Inc. t. 604.785.6884 @QY(1'�VOIC6 StYdtG'g[C'S 402 Lyon Place f. 604.987.6889 North Vancouver, BC V71- 1YS e. info @earthvoice.ca CITY OF SANTA MONICA STRATEGY FORASUSTAINABLE LOCAL ECONOMY FINAL REPORT Prepared for: The City of Santa Monica Prepared by: Earthvoice Strategies June 29, 2009 This page intentionally left blank. CITY OF SANTA MONICA STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY earry� � voice strategies Acknowledgements This report is the compilation of Earthvoice Strategies' work to define a Strategy for a Sustainable Local Economy (SSLE) for the City of Santa Monica. Earthvoice would like to thank the efficient and helpful staff at the City of Santa Monica for their work in providing information and coordinating stakeholder consultations. In particular we would like to thank Shannon Parry and Dean Kubani for their comments on earlier drafts of this report. We would also like to thank Sally Livingston for her advice on the availability of data for indicators. We would also like to thank the city staff, representatives of city agencies, representatives from the Santa Monica business community and Santa Monica residents for their participation in the stakeholder consultation. Their input was extremely valuable in formulating strategies for a sustainable local economy for Santa Monica. Finally, we would like to acknowledge the members of the Earthvoice team who contributed to this report: Paula Castellon, David Currie, Melissa Fotsch, Mark Pezarro, Amy Robinson, Monika Sheardown and John Tylee. We also extend our gratitude to Thomas 0sdoba for his numerous suggestions in his role as team advisor. CITY OF SANTA MONICA y� STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY - eGtl t�VO�Ce SftQ�@gte5 Table of Contents EXECUTIVE SUMMARY 1 Introduction 1 Section I —The City's Current State 2 Section II — Desired Outcomes 3 Section III — Roadma p For Sustainability 5 SECTION I: THE CITY'S CURRENT STATE 9 1. OVERVIEW OF THE CITY OF SANTA MONICA - 10 Objectives 10 Methodology 10 Background and Geography 10 Santa Monica Government 12 Land -Use 15 Environmental and Social Trends 21 Santa Monica's Fiscal Position 24 2. CITY POLICIES AND PROGRAMS FOR A SUSTAINABLE LOCAL ECONOMY 27 Sustainable City Background 27 Sustainable City Plan 27 Sustainable City Implementation Plan 29 Land Use & Circulation Elements 30 Community Workshop on Gang Violence 34 Creative Capital 34 I Am Santa Monica 35 Small Business Development Center 35 Conclusion 35 3. COMPARING SANTA MONICA MOTHER SUSTAINABLE CITIES 37 Objectives 37 Methodology 37 Discussion 37 4. RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL 43 yyrr I STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY edit' nice strcttegie i' TABLE OF CONTENTS - Objectives 43 Methodology 43 List of Model Indicators: 44 Indicator Data by Industry Sector 50 S. SEEKING SUSTAINABILITY WITHIN A REGIONAL ECONOMY AND A GLOBALIZED WORLD 53 Objectives 53 Methodology 53 Introduction to Local Sustainability 53' The Los Angeles Region in the World Economy 54 Santa Monica In The Context Of Los Angeles Region 55 6. SUMMARY OF FINDINGS- SECTION 1 63 SECTION II: DESIRED OUTCOMES - 65 7. STAKEHOLDER CONSULTATIONS 66 Objectives 66 Methodology 66 Workshop Themes 66 Conclusion 72 8. FRAMEWORK FOR DEVELOPING SUSTAINABLE ECONOMIC GOALS AND STRATEGIES 73 Objectives 73 Methodology 73 Regional and Global Trends That Shape Santa Monica's Economy 73 Economic and Fiscal Sustainability 76 Defining the Local Economy 80 Environmental and Social Sustainability 81 Conclusion 84 9. ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG -TERM SUSTAINABILITY 86 Objectives 86 Methodology 86 Economic Sustainability Principles 86 Social and Environmental Impact 92 Conclusion 95 .yy�� II STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY ectriti voice :ArGtteg[e5 TABIEOFCONTENTS 10. REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY 97 Objectives 97 Defining Local 97 Importance of A Local Economy 98 Case Studies of Local Government Support For Local Economic Development 101 Local Government Strategies to Support Local Economies 105 Conclusion 113 11. REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS 114 Objectives 114 Methodology 114 What is a Sustainable Development Indicator? 114 Criteria for Effective Indicators 116 Sources and Targets for New Economic Development Indicators 121 12. SUMMARY OF FINDINGS - SECTION II 123 SECTION III: ROADMAP FOR SUSTAINABILITY 125 13. RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY 126 Objectives 126 Methodology 126 Frameworkfor Recommendations 126 RECOMMENDATION 1: Sustainability Partnership with Business 129 RECOMMENDATION 2: Sustainability Center 134 RECOMMENDATION 3: High Impact Strategies 136 RECOMMENDATION 4: Maximize Local Purchasing 142 RECOMMENDATION 5: Green Commercial Infrastructure 146 RECOMMENDATION 6: Marketing Sustainable Santa Monica 151 Summary of Strategies 154 APPENDIX I - INDICATOR SELECTION 157 Indicator Ratings 160 Details on Potential Indicators 165 APPENDIX 11 - SPECIFIC INITIATIVES IN SAN FRANCISCO, SEATTLE, BOULDER, PORTLAND AND BURLINGTON 168 111 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY �arvoice sfru- f'egies TABLEOFCONTENTS Tables Table 1: Major Events 11 Table 2: Santa Monica Population Growth 12 Table 3: Santa Monica Race Distribution 13 Table 4: Civilian Employed Population 16 Years and Over (US Census 2006) 14 Table 5: Income and Benefits* 15 Table 6: Home Sale Price Medians 16 Table 7: Housing Affordability 1998 to 2007 16 Table 8: Land Use in Santa Monica 1980 -2007 17 Table 9: County Unemployment Data -June 2008 18 Table 10: Establishments per Industry Type & Average Employment 18 Table 11: Santa Monica Top Six Employers 19 Table 12: Entertainment, High -tech and Software Industries 2006/2007 20 Table 13: Commuting to Work 22 Table 14: Commuting Patterns 22 Table 15: Total Energy Consumption by Building Use (USA 2002) 24 Table 16: FY 2008 -09 Budget — Funds and Expenditures 25 Table 17: Self Supporting Funds FY 2008 -2009 ($ millions) 26 Table 18: Priority Goal Areas 29 Table 19: Opportunities and Challenges Focus Areas 33 Table 20: Sustainable Programs Summary 36 Table 21: Demographic Indicators 38 Table 22: Fiscal Indicators 39 Table 224: Fiscal Indicators - Expenditures 39 Table 23: Environmental Indicators 40 Table 24: Economic Indicators 41 Table 25: Normalized Data 47 Table 26: Actual Data 48 Table27: Actual Data forindicators without aTarget 49' Table 28: Water Use Citywide - Water Use by Industry 50 Table 29: Renewable Energy Use - Electricity Usage by Industry 51 Table 30: Renewable Energy Use - Natural Gas Use by Industry 52 Table 31: Average Wages by Sector, Santa Monica (2004) 74 Table 32: Employment by Sector 75 Table 33: Santa Monica Businesses Analyzed by Number of Employees 79 Table 34: Summary of Principles 84 Table 35: Guiding Principles for Economic Vitality in Santa Monica 87 Table 36: Fiscal 2008/09 Business License Tax Contributions; City of Santa Monica 88 Table 37: Arts, Entertainment, and Recreation Sub - sector Breakdown 91 Table 38: Impact, Opportunity or Contribution by Sector 96 Table 39: Economic Development Indicator Summary for Santa Monica and Comparable Cities 115 Table 40: Indicator Evaluation 118 Table 41: Summary of Current, Added, and Removed Economic Development Indicators 120 Table 42: Data Sources and Targets for Added Indicators 122 Table 43: Summary of Strategies 155 Table 44: Comparison of Recommendations 156 IV STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY �yrr gpYlwoice. strategies TABLE OFCONTENTS Table 45: Indicator Ratings Table 46: Details on the Potential Indicators Table 47: Potential Indicators without a Target Table 48: Water Use Citywide /by Industry Table 49: Sustainability Initiatives in Select U.S. Cities Figures Figure 1: Santa Monica Neighborhoods Figure 2: Land Use —Santa Monica 2004/05 Figure 3: 2006 Tourist Spending ($842 million per year) Figure 4: Job and Housing Balance Figure 5: Resource Consumption and Pollution Generation Model (Line Chart) Figure 6: Resource Consumption and Pollution Generation Model (Rose Diagram) Figure 7: Comparison of Revenues, Wages and Building Energy Intensity in Santa Monica Figure 8: Percentage of Spending Comparison: Local and Non -Local Businesses Figure 9: San Francisco Local Business vs. Chain Reinvestment Impact Figure 10: Economic Development Support for Local Business 160 165 166 167 169 11 15 21 23 45 46 89 99 100 111 V STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY eartl%voice.:Arc+tegies TABLE OF CONTENTS INTRODUCTION The City of Santa Monica is developing a coordinated, forward- looking local economic development strategy to foster a strong and diverse economy that will also meet the City's' sustainability goals. As part of this initiative, the City commissioned the development of a Strategy for a Sustainable Local Economy ( "SSLE" ). The overarching aim of the SSLE is to develop approaches that enrich sustainable aspects of the city's economy. It is also designed to be complementary to the City's Land Use and Circulation Element ( "LUCE ") update of the City's General Plan. The SSLE's purpose is twofold: • to ensure the long -term viability and sustainability of the local economy • to attract and retain businesses to Santa Monica that contributes to the overall environmental, economic and social sustainability of the community The development of the SHE was carried out in three phases. The first phase reviewed where the city is today in terms of economic development and the progress made to date with sustainability implementation. The second phase defined the key sustainability goals. The third phase set out recommended strategies for achieving those sustainability goals. This report is accordingly made up of three sections: Section I —The City's Current State • Section II — Desired Outcomes • Section III — Roadmap for Sustainability Section I, "The City's Current State ", describes the characteristics and sustainability policies of Santa Monica, compares its sustainability efforts to other communities in California and the United States, models some of the key environmental implications of the city's economic base, and positions the city in the regional and global contexts by which it is shaped. Section II, "Desired Outcomes ", considers what a sustainable local economy in Santa Monica should look like. Describing such an economy began with stakeholder workshops to help set out what was desired, and achievable, in the city. This foundation was used to design a sustainable mix of business types and sectors consistent with the Sustainable City Plan (SCP), the LUCE and the regional and global trends affecting Santa Monica's local economy. A series of case studies from elsewhere in the U.S., plus an analysis of economic development indicators from the City's SCP, are used to recommend approaches for a strong, local and sustainable economy for Santa Monica. Section III, "Roadmap to Sustainability', builds on the findings, insights and recommendations of the previous two sections to develop a series of recommendations, in effect a roadmap, to help Santa Monica become the sustainable community to which it aspires. The strategies focus on how to green existing businesses, attract and retain sustainable businesses and maximize reinvestment in the local economy by both businesses and residents. ' Throughout this report, the following convention is used. 'The City of Santa Monica' or'Yhe City' is used to refer to the municipal government; "the city of Santa Monica' or'the city' is used to refer to the entire community served by the City. STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY gpY(hVO�CH StYQt�g[H5 EXECUTIVE SUMMARY SECTION I —THE CITY'S CURRENT STATE Chapter 1 shows Santa Monica as a city where, simply put, people want to live and work. It has a scenic landscape with a fair climate and a charming "beach town' atmosphere complemented by attractive boulevards and a distinct neighborhood feel, a lively arts scene and a thriving economy. This chapter also draws out the issues Santa Monica faces in light of its enviable quality of life; namely, housing affordability, maintaining diversity in its residential population, traffic congestion and preserving the city's "beach town" character. Chapter 2 provides an overview of the City�s policies that are geared towards local sustainability. A review is made of the Sustainable City Plan, its two updates and Implementation Plan, its linkages to the LUCE and the City's workshops on gang violence and vision for creative capital. These policies show the City's long history of incorporating sustainability into the fabric of the City's visioning, planning and decision- making. Chapter 3 compares Santa Monica to five other sustainable cities in the U.S.: Pasadena, Santa Barbara, San Francisco, Portland and Seattle. This comparison —where the City performs soundly in its spending on sustainability, its economic diversity and waste management — clearly demonstrate the basis for its reputation as a sustainability leader. The comparison also points out areas where the City can improve such as affordable housing, air and water quality and utilization of public transit. Chapter formulates a model establishing the relationship between the city's economic activities and its pollution generation and resource consumption. The model illustrates Santa Monica's progress to date as well as presenting a tool for monitoring its progress towards its 2010 goals as outlined in the Sustainable City Progress Report. Chapter 5 outlines the regional and global forces that shape sustainability in Santa Monica's local economy. The chapter locates Santa Monica in one of the most powerful economic regions in the world and demonstrates the economic benefits it enjoys as a result. Santa Monica's advantages in terms of creative capital, a knowledge -based workforce and being a year -round tourism destination are balanced against high demand for housing and commercial space on the city's small land -base, regional pressures on its transportation network and the associated impacts on its local environment. Chapter 6 provides a summary of Section I Overall, Section l shows a series of interrelated challenges to sustainability for Santa Monica. The city has achieved high employment growth over the last five years despite the relatively high costs it imposes on businesses due to its attractive location and the availability of land for redevelopment. The city still has significant amounts of transitional or otherwise developable land and the trends described above suggest the community will only become more attractive in future years relative to other commercial development locations in the region. Employment growth has provided the City with revenue increases that give it a significant amount of fiscal flexibility relative to many other cities. To the extent this flexibility is used to provide additional amenities for city residents, this will make Santa Monica an even more appealing place to live and thereby increase housing prices further relative to other jurisdictions. This in turn will add to the revenues of the City as residential assessments increase, but will further curtail the diversity of the city and result in more traffic congestion from commuting as middle income earners are increasingly unable to afford local housing. A key element of the LUCE is an increased emphasis on provision of more workforce and affordable housing. This is a crucial element of a sustainable local economy, given that the two most important sectors of Santa Monica's economy — tourism and retail — rely substantially on modestly paid workers, who have, for the most STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY EQYVOICH StYQf�g[6S EXECUTIVE SUMMARY - part, to commute substantial distances to the city each day thereby contributing to traffic congestion. A substantial increase in workforce and affordable housing would significantly improve the sustainability of Santa Monica's economy. This study therefore recommends that the provisions of the LUCE relating to increasing the supply of workforce and affordable housing be implemented. SECTION II — DESIRED OUTCOMES Chapter 7 found that stakeholders in Santa Monica identify strongly with sustainability while recognizing the need for additional community, business and political efforts to be made fortheir economy to become more sustainable. Specifically, the workshops pointed to a need for an agreed upon definition of sustainable business, for business attraction strategies to target sustainable businesses, and for the City and community to foster leadership, innovation, and exchange of information to retain sustainable businesses. Further, the workshops confirmed that the City's current sustainability and green programs should be continued and there were a number of ways suggested to improve these programs. Chapter 8 uses the SCP, as well as the analysis in Section I, as a foundation for determining an optimal mix of business sectors in Santa Monica. Global and regional trends shaping the city's development were analyzed and the city's fiscal, social and environmental sustainability were considered in developing a framework of nine principles for determining an optimal mix of business sectors, in addition to suggested amendments to its existing focus and programs. They appear in Table 34 below. Table 34: Focus on attracting sectors that generate high revenues relative to their use of land, including: • Information • Professional, scientific and technical services 1 • Accommodation and food services • Arts, entertainment and recreation • Health, social and education services • Retail trade • Finance, insurance, real estate. z Give high priority to the retail and accommodation /food industries because of their disproportional importance to the Cttys fiscal sustainability. Amend the LUCE recommendations with regard to creative industries or local serving 3 office uses to consider financial and insurance companies that serve regional markets as local serving and require all office uses classified as "creative industries or local serving" -to meet minimal sustainability standards. 4 To enhance economic sustainability, attract businesses from a mix of different sectors, with diversity within sectors that serve a mixture of local, regional and global markets. Work to maintain the citys balance of large and small firms, and develop different 5 policies to address businesses of different size, and to maximize synergy among businesses of different sizes. Consider "local - serving' businesses those types of businesses that contribute to the 6 citys sense of itself, particularly in the areas of arts /creativity and sustainability, and /or contribute to Santa Monica's uniqueness as a retail and tourist destination. STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY @AYtvoiC6 SfYdfie9l @5 EXECUTIVE SUMMARY J 7 Continue to examine options to increase workforce housing in Santa Monica When targeting businesses for attraction, while taking into account the resource 8 consumption /pollution generation of sectors, focus more on sustainable processes and services rather than green products. 9 Fine tune and focus the criteria used for the Sustainable Quality Awards for identifying firms to be targeted for relocation to Santa Monica. Chapter 9 compares the sectors recommendedfor attention in principle 1 using five measures: revenues, business license tax contributions, employee income levels, water consumption and building energy use. Figure 7 below shows the results of this analysis. Figure 7. Comparison of Revenues, Wages and Building Energy Intensity in Santa Monica (Reproduced from chapter 9) Q.1 wage Q.2 High j Firgme and InAnanw` Any d Recnaa lloss and Aecleatkn .1FrdessbnatSCkmIAL - dlnfamatbn" aMTechnkalSeYlces$ Revenues, Revesuses LOW - HIGH Real Enateand Renmland leasing $ tt '.HeaRhcareand Educatbnal Services Salal hsslstal[e AHailTmde$ mmmodatlon dd =SeMcee $ �. owe Q,4 "No ClRles�is relative to electrical and naviral gasconsumptlonrelmhetoale yr Iptsorshlpnenmb /sator (2001 omlccemusand urgerarclelmr Aeshghummediumclxlelmplksmedumuseandsmaliclmklmpllabwu %� ttuassumedln(amatlonand Pnancea. sectors haveslmlWreraan�YUSage pattemsmtheprdanora4 sckattlflcanditthnlol SerNCas sevar. $ sESYOra xnh hgh bwmas Iicensetxs mmndHlons Olttal mw/[e) Was Isrekitre p sa Hprsorshipmer ctor EkCensus} 0 Implies highwrttt user, @1 ospkemsedlu mwtaruserand ImplIBSIOW werUNr. whuclMe kToneorswhn drta avaiWbk. STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY EXECUTIVE SUMMARY ear voi -e st"rafegies 4 Quadrant 2 is the most desirable; Quadrant 3 is the least desirable. Generally speaking, the objective of the SSLE should be to move sectors towards quadrant 2. Chapter 10 examines the importance of a strong local economy to sustainability and the economic and social benefits it brings. A number of local economic development strategies from other areas of the U.S. (Tacoma, WA; San Benito County, CA; Burlington, VT; Santa Fe, New Mexico) as well as outside the U.S. (United Kingdom, Australia) are reviewed. These studies point to a number of strategies local government can employ to foster a strong, local economy, including: • providing capital • supporting the not - for - profit sector • commissioning market research on the local economy • fostering "local first" spending by consumers, businesses and government • developing business incubators and workforce training • creating local revenue streams by leveraging existing sectors • leading through innovative policy development Chapter 11 establishes criteria for designing effective economic development indicators from a sustainability perspective and compares those of Santa Monica to those of five similar American cities. A number of additions and deletions to the existing set of economic development indicators are recommended to improve their effectiveness in measuring the city's progress towards a sustainable local economy. Chapter 12 provides a summary of section IL Sustainability is about systems thinking, reaching beyond traditional silos and ways of thinking and doing things differently. The analysis in Section II shows potential opportunities for Santa Monica to do things differently. Moving towards sustainability will require taking direction from Santa Monica's stakeholders and also consider what is possible with the current mix of businesses and the dynamic global marketplace the city inhabits. Ultimately, creating a sustainable local economy will go beyond perfecting the mix of sectors or choice of indicators. It will require developing programs, and a mihdset, to transform Santa Monica's business community into one where a sustainable way of thinking, collaborating and doing business is woven into the everyday business fabric. This will require a strong, on -going partnership between the City of Santa Monica and the business community. SECTION III — ROADMAP FOR SusTAINABILITY Chapter 13 sets out recommendations for moving Santa Monica further towards the sustainable community it aspires to be through a set of strategies to green existing businesses, attract and retain sustainable businesses and maximize reinvestment in the local economy by both businesses and residents. They are grouped into six categories: 1. Sustainability Partnership with Business: Develop a strong, long -term sustainability partnership with the private sector. 1.1 Sustainability Working Group - Establish a group to provide advice on implementing the recommendations of this report as well as efforts needed to address the inventory of critical business issues with membership drawn from city staff and the Santa Monica business community. Encourage broad participation within the, business community through an outreach campaign. 1.2 Make Recommendations to Improve Business Climate STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY - eC•r7fi V0jee StrCtteg[e!& EXECUTIVE SUMMARY -The Sustainability Working Group would develop recommendations to improve the business climate and monitor progress in implementing them. 1.3 Recognize Sustainability Achievements of Santa Monica Businesses - The Sustainability Working Group would document and publicize the existing sustainability achievements of Santa Monica businesses. 2. Sustainability Center: Develop and grow a high profile physical presence in the city, outside City Hall, that offers Sustainability- related services and information that can grow to become a hub around which firms offering sustainability- related goods and services might naturally cluster. 2.1 Sustainable Santa Monica Center (SSMC) - Provide a "one- stop - shopping" location for information about Sustainability provided by the Cityto make it easier and more efficient for businesses to access existing services. 2.2 Sustainable Business Hub - Bring together all the sustainability- related resources of the City, the not - for - profit sector and others to create a hub of expertise and information services as well as possibly including an incubator for new green local businesses to get started; to be housed in a state of the art green building. 3. High Impact Strategies: Work with the private sector to develop and implement sustainability strategies for key sectors with high potential for reducing Santa Monica's ecological footprint. 3.1 Cluster Networking (by sector) - Bring Santa Monica businesses operating in the same sector together to network and share expertise and best practices in implementing sustainability within their firms. 3.2 Sustainable Supply Chains (by sector) - Lead the nation in fostering sustainable supply chains that will include benefits such as greener procurement practices, increased local and regional sourcing and strengthening fair labour practices. 3.3 Business Ecology Networks (by location) - Set up business ecology networks within the BIDS to encourage businesses to reduce resource inputs and waste outputs by sharing resources, capturing the outputs of one business for use as inputs to another and collaborating on group sustainable purchasing. 4. Maximize Local Purchasing: Identify specific opportunities to increase local purchasing and green supply chains, particularly at the retail level, followed by an intensification of "buy local" efforts to plug gaps and promote green purchasing opportunities. 4.1 Create a Local Business Baseline - Establish a count of how many local businesses are currently operating in Santa Monica allowing the City to measure how "local" the economy is. 4.2 Assess Retail Leakage - Conduct an in -depth analysis of retail leakage, i.e. the amount spent by Santa Monica residents on retail products outside the city, estimated at over $200 million in the LUCE. 4.3 Plug Retail Leaks - Develop a plan to plug leaks, focussing on encouraging local businesses to do so. 4.4 Expand "Buy Local" Campaign STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY �pYi I�VOiCe. SYYQt6l3[6S EXECUTIVE SUMMARY -Build on the initial success of the City's Buy Local campaign to foster new or expand existing local businesses through programs such as sharing valuable market research, as these small retailers can rarely afford the research and market development of the larger chains. 4.5 Sustainable Retail Center - Develop an RFP for a sustainable retail center anchored by a large format, high volume retailer with development permission tied to a package of sustainability commitments such as green building features, local hiring and living wage commitments, the creation of workforce housing and space for local retailers. 5. Green Commercial Infrastructure: Develop a long -term approach to "greening" new and existing commercial buildings. 5.1 Building Energy Retrofits - Implement an energy efficiency retrofit upon sale ordinance similar to the existing water efficiency retrofit upon sale ordinance to reduce energy use in commercial buildings; consider creating a loan program to encourage energy retrofits once economic conditions improve. 5.2 Solar Grant - Accelerate the uptake of solar power in commercial buildings through a program of grants of up to $10,000 per commercial building to defray the initial capital costs for solar installations. 5.3 Downtown Energy Efficiency Convene a downtown energy efficiency taskforce to look at ways of taking advantage of existing electricity and gas utility programs for peak shaving, demand response and energy efficiency, and, once economic conditions improve, develop a long -term energy plan and financing strategy for the downtown. 6. Marketing Sustainable Santa Monica: Develop and implement a plan to market Santa Monica to the businesses and visitors it seeks to attract by capitalizing on its sustainability brand. 6.1 Attract Appropriate Businesses (Market to Businesses) - Once there is a perceived positive change in the business climate, develop an appropriate marketing program to bring sustainability- related companies to Santa Monica and enhance its sustainability brand in the US business community. 6.2 Attract Sustainability- Minded Visitors (Market to Visitors) - Once sustainability credentials have been well established within the food services and accommodation sectorthrough the cluster work in that sector, market Santa Monica as a "green" destination to visitors and expand the existing efforts to attract sustainability- themed conferences. Table 44 below assesses each recommendation against: • Impact on the goals of this report, namely: greening existing businesses, attraction and retention of sustainable businesses, maximizing reinvestment in the local economy as well as support for local business. • Their impact on wages, revenue, resource intensity and contribution to City revenues. 7 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY ectrflkvoice SfrGefiC�i65 EXECUTIVE SUMMARY Table 44: Comparison of Recommendations (Reproduced from Chapter 13) 1.15ustainability Working Group R V V V V 1.2 Improve Business Climate R 1.3 Recognize Sustainability Achievements R 2.1 Sustainable Santa Monica Centre 2.2 Sustainable Business Hub 3.1 Cluster Networking 3.2 Sustainable Supply Chains 3.3 Business Ecology Networks 4.1 Create a Local Business Baseline R 4.2 Assess Retail Leakage 4.3 Plug Retail Leaks 4.4 Expand Buy. Local Campaign 4.5 Sustainable Retail Center 5.1 Building Energy Retrofits 5.2 Solar Grants 5.3 Downtown Energy Efficiency 6.1 Attract Appropriate Businesses 6.2 Attract Sustainability-minded Visitors Note: A required recommendation is one that lays the foundation for others; the remaining recommendations are programmatic and should be prioritized drawing on feedback from the business community and other stakeholders. 8 STRATEGY FOR A SUSFAINASLE LOCAL ECONOMY EXECUITVE SUMMARY 6PrVO1C� s'trQfegies CITY OF SANTA MONICA SECTION I: THE WS CURRENTSTATE SECTION I: THE CITY'S CURRENT STATE This is Section I of a three -part Strategy for a Sustainable Local Economy prepared for the City of Santa Monica. This section describes the characteristics and sustainability policies of Santa Monica, compares its sustainability efforts to other communities in California and the United States, models some of the key environmental implications of the city's economic base, and positions the city in the regional and global contexts by which it is shaped. This report was compiled based on public data including publications, reports, and media coverage and internet sites. While every effort has been made to confirm the validity of supplied facts and figures some inaccuracies may exist. Please report all such corrections to info @earthvoice.ca. The data in this section is as was available at 29 October, 2008. STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY } SEcnON I: THE CITY'S CURRENT STATE E'QY VO�Ce StYQt @1�[L'S OBJECTIVES This chapter provides a general overview of the city of Santa Monica2 from a sustainability perspective. It is intended to provide readers with a high level understanding of the city's economic, social and environmental trends, programs and challenges. The chapter begins with a general description of Santa Monica, its history and its government before introducing relevant economic characteristics. METHODOLOGY - The data for this section was gathered from 3 sources: • United States (U.S.) Census • financial and internal City documents • supplemental external sources Census data was normally selected over city data for improved accuracy when comparing data sets as available City data came from varying years while Census data was on a scheduled timeline. BACKGROUND AND GEOGRAPHY Santa Monica's incorporation in 1886 resulted in its first real estate boom; land prices instantly increased in East Santa Monica from $40 to $200 per acre. In 1893 the Long Wharf was built with the intention of it serving as the Port of Los Angeles, marking one of the first threats to Santa Monica's "beach town" appeal. However, the establishment of the port in San Pedro Bay meant Santa Monica was able to maintain its scenic charm, a quality that continues to attract artists, businesses, residents and visitors to this day. The Douglas Aircraft Company (later McDonnell - Douglas) is another important part of Santa Monica's history. McDonnell - Douglas was established in Santa Monica in 1921 and by the 1960's it had become the city's largest employer. However, due to economic downturns the plant was demolished in 1975 causing a major loss of jobs and spinoffs associated with the plant. By the end of the 1970's large segments of the industrial corridor around the plant had been redeveloped into an office park as part of an effort to increase the city's business sector and revitalize the economy. Santa Monica is spread across 8.3 square miles and is bordered by the city of Los Angeles on three sides and 3 miles of sandy beaches to the west. The city has 6 distinct neighborhoods (see Figure 1. The city's beaches, mild climate, public services, accessibility to parks, its position as a transit hub and its proximity to the Los Angeles region have further contributed to its appeal'. Just sixteen miles from downtown Los Angeles and 6 miles from the Los Angeles International Airport, Santa Monica is ideally situated for visitors, residents and business. Its major transportation links include two freeways: Interstate Highway 10 (one of the busiest travel corridors in the country°) and Highway 405; and four major east -west thoroughfares: Santa Monica (Route 66), Wilshire, Olympic and Pico Boulevards. Santa Monica's boulevards, serviced by streetcars until the 1950's, are now a central part of the city s transportation arteries and communityfeel. 2 Throughout this report, the following convention is used. "The City of Santa Monica" or'the City' is used to refer to the municipal ovemment;'Yhe city of Santa Monica" or' the city' is used to refer to the entire community served by the City. City of Santa Monica. (2008). Sustainable City Progress Report. Retrieved Oct 17; 2008, from http:/ A mw4Oismgov.neVepd /scprAndex.htm - 5 City of Santa Monica. (2008). Expo —Af the Way to Santa Monica. Retrieved Oct 17, 2008, from http:IA�.smgov.net/expo/ 10 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY y� 5ECnON I: THE CITY'S CURRENT STATE ectir O�_e StrCteg(e5 CHAPTER 1: OVERVIEW OF THE CITY OF SANTA MONICA Figure 1: Santa Monica Neighborhoods N 1� c,I Sa °�a�ocCa of M�NtPC1P .nee °"eHd NORTH J� a OCEAN, PAaK Venice ski 7 k �.6. �n An overview of major city events is outlined in Table 1. Tabie 1: Major Events 11 STRATEGY FOR A5USTAINABLE LOCAL ECONOMY G'QY(nVO�Ce. StYQfe��CS SECTION ]:THE CITY'S CURRENT STATE CHAPTERS: OVERVIEW OFTHE CITY OF SANTA MONICA _ SANTA MONICA GOVERNMENT As a chartered county, Los Angeles County has its own governing board, county officers and county offices responsible fortraditional mandatory services such as law enforcement, property assessment, tax collection, public health protection, public social services and reliefs. Among its specialized services are flood control, water conservation, parks and recreation and many cultural activities. Santa Monica is incorporated in the County of Los Angeles and is governed by its own charter ratherthan state law. It has a Council- Manager form of government consisting of seven members elected by the community at large who serve on the governing bodies forthe City of Santa Monica Redevelopment Agency and the Housing and Parking Authorities. Council selects the Mayor, and appoints a City Manager, a City Attorney and a City Clerk from its members. In addition to its four Elected Bodies - City Council, Community College District Board of Trustees, Unified School District Board of Education and Rent Control Board - Santa Monica has twenty -four supporting boards, commissions, and other appointed bodies. Municipal Services Unlike other cities in Los Angeles County, Santa Monica is unique in that it operates most of its own municipal services directly, including police, fire, refuse collection, water, sewer, transit services, and a cable television station. Many of these services have incorporated progressive sustainability programs into their operations. The People Santa Monica's population of 88,050 constitutes almost one percent (.09 %)6 of the population of Los Angeles County. In the past 15 years Santa Monica's population growth has remained fairly steady with a 3.2% decline between 1990 and 2000 and then an increase again in 2006 (see Table 2: Santa Monica Population Growth). In contrast, during this same period other surrounding Los Angeles County jurisdictions have experienced higher rates of growth 7. In 2006, Santa Monica's population density was 10,608 people per square mile, denserthan Los Angeles City at 7,350 people per square mile$. Table 2: Santa Monica Population Growth' -- n" �' USrensus 1980 X1990 2000 Nllj;�,_ rA'1 Growth 4 � 2U06 V �_ to,2aos Currently Santa Monica consists primarily of one and two story buildings, even in districts that are zoned multi - family. The majority of Santa Monica's 47,000 households are made up of people living alone (55 %) orfamilies (34 %). The city has an average of 1.8 people per household compared to 3.7 for Los Angeles SLA County. (2008). LA County Overview. Retrieved Oct 17, 2008, from http: /Amw.lacounty.info /oveNiew.htm s City of Santa Monica. (2bO5). Opportunities and Challenges. Retrieved Oct 17, 2008, from http:/ Avww. shapethefuture2025 .net/PDF /oc_report _web.pdf 7 Frank Gruber. (2007). Better Here than in Philadelphia: Retrieved Oct 17, 2008, from The Lookout http : /Aw .surfsantamonica.coni/sSanta Monica_site /the Iookouticolumns/FrankGruber/FG- 2001/8_ 2001/8_3_ 2001_ Better _Here_Than_in_Philadelphia.htm. Posted on 16 May 2008 05:23:30 GMT Bus Census Bureau. (2006). American Community Survey. Retrieved Oct 17, 2008, from http:lifactfiinder. census .gov /seNlet/ADPTable7_bM= y &-qr_ name = ACS_ 2006_ EST_ G00 _DP2 &- geo_id= 16000US0670000 &- ds_ name = ACS_ 2006_ EST _ GOO _& - _tang= en &- redoLog= false &- _sse =on s US Census Bureau. (2006). Population Estimates Census 2000, 1990. Retrieved October 17, 2008, from http: / /factriinder.census.gov/ 12 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION [:THE CITY'S CURRENT STATE @GY voice sfral -�gi�s CHAPTER is OVERVIEW OFTHE CITY OF SANTA MONICA County and 2.6 for the nation10. Out of these households, more than three quarters (77 %) are born in the U.S. and 38% are born in California. Santa Monica's U.S. born figures reflect state norms; California has the lowest percentage of residents living in the State born in the U.S. (88% is the national average)11. Despite the large influx of foreign born residents, the population in Santa Monica remains fairly homogeneous as shown in Table 3. This lack of diversity is likely a reflection of the high cost of living in Santa Monica and the correlation between U.S. race and real median income leveIS12. Table 3: Santa Monica Race Distribution White 78% 47% 74% Asian 11% 13% 4% Black or African American 5% 8.9% 12% Hispanic 9% 47.3% 15% Source: US Census 2006 Santa Monica has a higher concentration of adults (median age of 39.3), compared to Los Angeles County (median of 32). Almost 15% of Santa Monica residents are over 65 years of age while youth (under 19) are underrepresented compared to Los Angeles County (16% versus 31% respectively). Partly due to its highly educated population, 67% of Santa Monica's employed population has a management or professional position compared to 33% in Los Angeles County (see Table 4). Most of Santa Monica's civilian labor force work in the educational, health and social service sector (18.8%), followed closely by professional, scientific and management sectors (18.6%), the information sector (14.6%), and the arts, entertainment, recreation, accommodation and food service sector (10%)13. There is also a large population working from home, which has increased from 8% in 2000 to 11% in 2006'", a numberthat is significantly higher than the county and national average of only 4 %. . In contrast, less than 18% of residents are in the construction, manufacturing, wholesale, retail, transportation and utilities sectors, which is less than half the county and national average. This percentage for Santa Monica residents has been steadily decreasing forthe last 20 years and reflects the fact that the majority of trade and service professionals working in the city today are commuting to work from outside the city. This is a trend that is likely to continue if local housing affordability remains a barrier to employees in sectors with lower median incomes. 10 US Census Bureau. (2006). American Community Survey. Retrieved Oct 17, 2008, from http: / /factfinder. census. gov/ servl et/ NPTable?_ bm= y&- geo_ id= 16000USO670000 &- gr_name= ACS_2o06_EST_G00_NP01 &- ds_name= &- redoLog =false 11 US Census Bureau. (2008). State and County QuickFacts. Retrieved Oct 17, 2008, from http: // quickfacts. census.govlgfd /states /06000,htmi 12 US Census Bureau. (2004). US Census Bureau News. Retrieved Oct 17, 2008, from http:/Auww.census.gov/Press- ReleaseAwAAf/releaseslamhivesfinwme wealth /002484.htmi 13 The City of Santa Monica. (2007). Economic & Demographic Profile: Employment. Retrieved Oct 17, 2008, from http: / /santa- monica.org/ business /demographics /2006empwork.htm 14 US Census Bureau. (2006). American Community Survey. Retrieved Oct 17, 2008, from http: //factfinder.census .gov / sere [et(ADPTable ?_bm= y &- a.r_name= ACS_ 2006_ EST_ G00 _DP3 &- geo_id= 16000US0670000 &- ds _name = & - _tang= en &- redoLog =false 13 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY OpYlkvOir StYAtB.giES SECTION 1: THE CITY'S CURRENTSTATE CHAPTER 1; OVERVIEW OFTHE CITY OF SANTA MONICA Table 4: Civilian Employed Population 16 Years and Over (US Census 2006) ® e Total Occupations 48,867 Management, Professional, and Related Occupations 32,544 - 67% 33% 34% Service Occupations 4,514 9% 17% 17% Sales and Office Occupations 9,776 20% 27% 26% Construction, Extraction, Maintenance and Repair 883 2% 9% 10% Occupations Production, Transportation, and Material Moving 1,150 2% 14% 13% Occupations Agriculture, Forestry, Fishing and Hunting, And 0 0% 0% 2% Mining Construction 1,541 3% 7% 8% Manufacturing 1,983 4% 12% 12% Wholesale Trade 1,129 2% 4% 3% Retail Trade - 3,215 7% 11% 11% Transportation and Warehousing, And Utilities 1,002 2% 5% 5% Information - 6,358 13% 4% 2% Finance And Insurance, and Real Estate And Rental 5,635 12% 8% 7% And Leasing Professional, Scientific, and Management, And 11,117 23% 12% 10% Administrative and Waste Management Services Educational Services, and Health Care, and Social 9,062 19% 19% 21% Assistance Arts, Entertainment, and Recreation, And 5,272 11% 9% 9% Accommodation, and Food Services Other Services, Except Public Administration 1,190 - 2% 6% 5% Public Administration - 1,363 3% 3% 5% Since the top positions of Santa Monica civilians tend to be those that earn higher wages, Santa Monica's median household income of $61,423 was 27% higher than the national average. High income earning and educated parents tend to value high standards of education 15, which may explain why many families are attracted to Santa Monica. Santa Monica boasts a high standard of education across its 18 public schools, private schools, colleges and vocational institutes, yet the number of city students attending private schools is their K -12 years is more than double the state average. Table 5 shows the median and mean household income in Santa Monica compared to Los Angeles County and the nation as a whole. Mean household income is 20% higher than that for the County and 26% higher than the corresponding national figure. Median household income is 42% higher than that for the County and 58% higher than the corresponding national figure. Table 5 also shows the sources of income for Santa Monica households. 15, Santa Monica Coalition for a Liveable City. (2008). Patterns of Land Use in Santa Monica. Retrieved Oct 17, 2008, from htp://www.smele.net/RIFT/PDF/Pattem—of—Land—Use—in—SM.pdf } 14 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY gpY kvoice SlYQ -t6g[e'S SECTION I: THE CITY'S CURRENT STATE . CHAPTER 1: OVERVIEW OF THE CITY OF SANTA MONICA Table 5: Income and Benefits* Irta at 10 SaLT Le uC SA MW 1 � ltMaon` NA �...v Median .. income do FS—M-114 A esyCoun NmlfTe�Kf ,use.rarrta Earnings Mooca' =� �e " MUM With Social - ® t ll With r With Benefits In The Past 12 ® =mom s *Note: income sources are not mutually exclusive; some households received income from more than one source LAND -USE The total assessed value of property in Santa Monica in the fiscal year 2004/2005 was approximately $18.1 billion (see Figure 2: Land Use —Santa Monica 2004/05). The three largest categories of land use were residential at 61 %,public use at 17% and commercial space at 11 %. a 2: Land Use —Santa Monica 20041L Other, 2% Publicly I owned or oriented uses, 17% Residential There are approximately 47,000 housing units in Santa Monica (2007)16. The majority (79 %) is multi - family units and another 20% are single detached homes. A strong focus on commercial growth, scarcity of land and housing stock, desirability of the city as a residential location, rent decontrol and the general escalation of residential real estate prices has led to a shortage of affordable housing in Santa Monica. Table 6 shows the result of these pressures, where in June 2008 the median prices for a home in Santa Monica, was double that of Los Angeles County. 16 US Census Bureau. (2006). American Community Survey. Retrieved Oct 17, 2008, from http: / /factfinder. census. gov/ seNtet/STTable7_ bm= y &- geo_id= 16000US0670000 &-qr _name= ACS_2006_EST_G00_S2504 &- ds_ name = ACS_ 2006 _EST_G00_ &- _lang= en &- redoLog =false STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY eQf-(I.VO�Ce. Stf-QfiE�t65 SECTION is THE CITY'S CURRENT STATE CHAPTER I: OVERVIEW OFTHE CITY OF SANTA MONICA Table 6: Home Sale Price Medians" �Cou CttY/ Ar €d �_ ,� uR 6 , a ^. eb8" XI o yr Ju � u Q .6 Chi IF to Al 1 rrr .: I rrr p� a ;; come Re al` '-,11.�'UnrtSfze `-� 19'48 � k ,;.Neededto� .�IncomO„ Increase, ,�--� � r..�,1��j,NeedetlTa erte .. �iffeterrce I c ea e�..- Residential Rental There are an estimated 33,000 rental units in Santa Monica. Approximately 70% of Santa Monica residents are renters, compared to 52% in Los Angeles County and a 33% average in the U.S. Until 1999, 27,278 of the rental units were under rent control. At that time the state initiated the vacancy decontrol law (the Costa - Hawkins Rental Housing Act) allowing owners to increase rents to market rates'$. By 2008,14,672 or 549/6 of controlled rental units had converted to market rate rents. In order to reduce unjust evictions, the City implemented just cause eviction protection in rent controlled units. This measure along with other city initiatives has helped to keep 40% of the controlled units affordable to low and very-low income renters19 Prior to 1999, 81% of rental units had median rent levels that were affordable for low or very-low income households compared to only 13% today. Since 1999, market rate rents have shown increases of up to . 100% and have resulted in higher turnover rates where length of stay is below the state average. By 2007, the income required to afford Santa Monica's Median Market Allowable Rents (MARS) was between $61,400 and $92,500 depending on apartment size (see Table 7). According to the U.S. Department of Housing and Urban Development (HUD) a $56,500 median income was needed for a "four- person household" to afford rental housing in LA County. Assuming a four - person household needs a two - bedroom apartment, the comparable required median income in Santa Monica would be $79,832. Table 7: Housing Affordability 1998 to 2007' Table notes: Median market rent is calculated as 30% of eross income December 1998 median MARS with 1999 -2007 general adjustments added Commercial From 1980 to 2000 Santa Monica's growth focused on the commercial sector. Asa result office floor space almost tripled during this period. It continued to grow at the rate of about 75,000 square feet per year 17 Data Quick Information Systems. (2007). California Home Sale Activityby City. Retrieved October 17, 2008, from http: /MA .dgnem.coMCharts /Annual - Charts /CA- City- Charts2lPGAR07.aspx 18 Santa Monica Rent Control Board. (2007). The Impact of Market Rate Vacancy Increases Nine -year Report. Retrieved October 17, 2008, from http: /A m . santa- monira:org/ rentcontrol / rcb_ reportsNac_ reportsNac_Rept_123107.pdf t9 City of Santa Monica. (2007). Some of Our Sustainability Successes 2007. Retrieved October 17, 2008, from hftp: /MA . smgov. neVepd/ scpr /SCRC_ReportCard_Successes.pdf 2e Santa Monica Rent Control Board. (2007). The Impact of Market Rate Vacancy Increases Nine -year Report. Retrieved October 17, 2008, from http: /Aw .santa- moniw.org /rentcontrol/ rcb_ reportsNac _reportsAlac_Repl_123107.pdf 96 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY y.s.r1 .y. SECTION I: THE CITY'S CURRENT STATE @Gr'[I.VO�CF•' Str'Qte�iCS CHAPTER I: OVERVIEW OFTHE CRY OF SANTA MONICA ' 1 Atljitsted� p� [post �tw' come Re al` '-,11.�'UnrtSfze `-� 19'48 � k ,;.Neededto� .�IncomO„ Increase, ,�--� � r..�,1��j,NeedetlTa erte .. �iffeterrce I c ea e�..- Table notes: Median market rent is calculated as 30% of eross income December 1998 median MARS with 1999 -2007 general adjustments added Commercial From 1980 to 2000 Santa Monica's growth focused on the commercial sector. Asa result office floor space almost tripled during this period. It continued to grow at the rate of about 75,000 square feet per year 17 Data Quick Information Systems. (2007). California Home Sale Activityby City. Retrieved October 17, 2008, from http: /MA .dgnem.coMCharts /Annual - Charts /CA- City- Charts2lPGAR07.aspx 18 Santa Monica Rent Control Board. (2007). The Impact of Market Rate Vacancy Increases Nine -year Report. Retrieved October 17, 2008, from http: /A m . santa- monira:org/ rentcontrol / rcb_ reportsNac_ reportsNac_Rept_123107.pdf t9 City of Santa Monica. (2007). Some of Our Sustainability Successes 2007. Retrieved October 17, 2008, from hftp: /MA . smgov. neVepd/ scpr /SCRC_ReportCard_Successes.pdf 2e Santa Monica Rent Control Board. (2007). The Impact of Market Rate Vacancy Increases Nine -year Report. Retrieved October 17, 2008, from http: /Aw .santa- moniw.org /rentcontrol/ rcb_ reportsNac _reportsAlac_Repl_123107.pdf 96 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY y.s.r1 .y. SECTION I: THE CITY'S CURRENT STATE @Gr'[I.VO�CF•' Str'Qte�iCS CHAPTER I: OVERVIEW OFTHE CRY OF SANTA MONICA ' between 2000 and 2004 and then declined slightly from 2004 to 200721. Table 8 shows historical land -use trends in the city. 0o Bea ;s: s- a a RINIVEM Office 4,893,300 13,081,335 13,454,144 13,428,450 - Growth, %of 1980 167% 175% 174% Commercial/ Retail 5,323,282 5,892,588 6,000,960 5,998,130 - Growth, % of 1980 11% 13% 13% Industrial 31245,600 3,434,947 3,465,144 3,465,000 - Growth, %of 1980 6% 7% 7% Total (non residential) 13,462,182 22,408,870 22,920,248 _22,891,580 - Growth, %of 1980 66% 70% - - 70% Residential (units) 46,393 47,863 49,297 50,151 - Growth, %of 1980 3% 6% 8% Office Approximately 60% of recent non - residential parcel redevelopment is for new office uses which in concert with the city's convenient access to Los Angeles has made Santa Monica the second largest office submarket in the West Los Angeles office market. The city directly benefits from the large concentration of high- margin firms from the entertainment and technology sectors. Asking rates in Santa Monica have increased steadily since 2004 but are projected to stay flat over the next year or longer due to a slowing economy. Regionally, the West Los Angeles area continues to have the greatest amount of square footage under construction (1.6 million square feet). In the second quarter of 2008 the Santa Monica vacancy rate was 10.2% compared to 12.1 %22 in Los Angeles County. Also Santa Monica's lease rates were among the highest in the county, quoted at a per square foot rate of $6.02 for Class A and $4.59 for Class B space,23 compared to the Los Angeles Basin which had an average of $3.23 for Class A and $2.40 for class B during that same period 24. Retail As of 2007, there was a combined 5.9 million square feet of retail in the city. This represents an increase of approximately 675,000 square feet since 1980. The retail sector is one of the city s major employers, with the second highest recorded sales receipts of any sector at $3.08 billion after wholesale trade (see Table 10 below). While Santa Monica is home to many boutiques and specialty shops, chain stores have started to establish a presence in the city. Industrial As of 2007, there was a combined 3.5 million square feet of industrial space in the city, which is only slightly higher than the industrial space available in 1980. The industrial market makes up 2% of total land use in Santa Monica and it is widely recognized that the area's industrial. manufacturing sector continues to decline (currently less than 6% of residents are employed in the sector). The City foresees little opportunity 21 Giles Smith. (2008). Patterns of Land Use in Santa Monica —A Summary. Retrieved Oct 17, 2008, from hftp: /MAnnv.smcic.nettRIFT /PDF /Pattem of Land_ Use in_SM.pdf 22 Grubb & Ellis Research. (2008). Office Market Trends North America. Retrieved Oct 17, 2008 , from http:JMAaw.grubb- ellis .conVPDF /natmrkttmd/markettrendoff m.pdf 23 Colliers International. (2008). West LA Office, Market Report. Retrieved Oct 17, 2008, from http: /A M .colliersmn.com/ prod /cegrd.nsf/ publish/ 5F1C2EOSBADC1832852574800003E98B /$File /OFFVVLAO8Q2.pdf 24Colliers Internalional. (2008). West LA Office Market Report. Retrieved Oct 17, 2008, from hftp:/ lwvwv. colliersmn .conVprod/ccgrd.nsf /publishd5Fl C2EO5BADC1832852574800003E98B /$File /0FFWLA08Q2.pd 17 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY epY(nVO�CC StYGtC�[e5 SECTION I: THE CITY'S CURRENT STATE, - CHAPTER 1: OVERVIEW OFTHE CITY OF SANTA MONICA in the sector's redevelopment n and predicts former manufacturing lands will be directed to higher density uses in the coming years. This sector's decline was foreshadowed by the closing of the Macdonald - Douglas plant and many of the jobs it formerly provided have since been replaced byjobs in the information technology sector since the late 1990s. EMPLOYMENT AND INDUSTRY Santa Monica's current unemployment rate is 5.8% (June 2008), a rate much lower than the 7.1% it faced in 2000 as well as 1.3% lower than the average for Los Angeles County26 (see Table 9). Of employed residents, 97% work within Los Angeles County, 32% work in Santa Monica 27 and 11% work from home. Table 9: County Unemployment Data -June 2008 AreaN� 'e _� t�hgr tare ?� _ "UiiempfoYmept WIM 91 Employt�nC 3Nulnf#gr �_' r- x' m � Wiz, , � :11 Ix� "f pp� NE. _. • ;• • � ' 1 :1/ � 111 Source: State of California Industry Table 10 shows the city's top 5 industries by number of employees. Collectively, they contribute to 73% of city employment and 71% of annual payroll. Accommodation and food services provide 149/0 of employment yet only 5% of payroll. Similarly, Retail Trade provides 13% of employment but only 7% of payroll. Conversely, Information provides 18% of employment, but 25% of annual payroll. Table 10: Establishments per Industry Type & Average Employment 25 City of Santa Monica. (2005). Opportunities and Challenges. Retrieved October 17, 2008, from hdp: /Aw .shapethefuture2025.net/PDF /oc_ report web.pdf 26 State of California, Employment Development Department. (2008) Labor Market Info Overview. Retrieved October 17, 2008, from hfip:/ Annwv.labonnarketinfo.edd.m.gov 27 City Santa Monica. (2007). Sustainable City Progress Report. Retrieved October 17, 2008, from e . santamonica. org/ epd/ scpr/ EconomieDevelopment/E3 _JobHousing.htm STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECHON is THE CITY'S CURRENT STATE CHAPTER 1: OVERVIEW OF THE CITY OF SANTA MONICA 18 eartik/oice _Surotegies 111 111 MEM Information 596 11% NA - 848,532 25% 12,921 18% Professional, scientific, & 1,105 20% 1,731,424 13% 714,251 21% 10,554 15% technical services Accommodation & 390 7% 591,059 4% 172,362 5% 10,061 14% food services Health care & social 805 15% 1,072,514 8% 398,612 12% 9,483 13% assistance Retail trade 735 13% 3,081,902 23% 250,657 7% 9,335 13% Other services (except public 406 7% 362,421 3% 91,832 3% 4,045 6% administration) Real estate & rental 367 - 7% 651,276 5% 139,588 4% 3,209 4% & leasing Arts, entertainment, t560 10% 558,185 4% 305,085 9% 3,012 4% & recreation 1 25 City of Santa Monica. (2005). Opportunities and Challenges. Retrieved October 17, 2008, from hdp: /Aw .shapethefuture2025.net/PDF /oc_ report web.pdf 26 State of California, Employment Development Department. (2008) Labor Market Info Overview. Retrieved October 17, 2008, from hfip:/ Annwv.labonnarketinfo.edd.m.gov 27 City Santa Monica. (2007). Sustainable City Progress Report. Retrieved October 17, 2008, from e . santamonica. org/ epd/ scpr/ EconomieDevelopment/E3 _JobHousing.htm STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECHON is THE CITY'S CURRENT STATE CHAPTER 1: OVERVIEW OF THE CITY OF SANTA MONICA 18 eartik/oice _Surotegies Source: U.S. Bureau of the Census, 2002 Economic Census Businesses Santa Monica was home to over 5,500 businesses and 72,000 jobs in 2002 generating over $3.5 billion in wages28. Businesses are spread throughout the city with the highest concentration located in the downtown area. In 2007, only 30 businesses were reported as having more than 100 employees, and only 9 had more than 500 employees. Table 11 shows that the city's top thirty -two employers represent 29% of the city's jobs and over a third of these come from the top 6 city employers. Another 7,900, or 16% of Santa Monica residents, are self - employed compared to only 9.5% for Los Angeles County and 6.8 %forthe U.S. Table 11: Santa Monica Top Six Santa Monica Education 2,517 3.31% 1,595 2.52% College e iN, City of Santa Monica I Government 2,177 2.86% 1,510 111 111 Administrative & Malibu Unified Education 1,650 2.17% 1,300 2.06% School District - support & waste 201 SaintJohn's Hospital 4% 248,588 2% 87,912 3% 2,964 Health Services 4% management & 1,542 2.44% Medical Center Santa Monica -UCLA Health Services remediation service 1.77/ 1,000 1.58% Hospital MTV Networks Wholesale trade 195 1.39% 4% 4,810,469 35% 185,830 6% 2,657 4% Manufacturing 111 2% 398,172 3% 115,529 3% 2,617 4% Educational services 58 1 1% 107,586 1 1% 42,910 1 1% 11139 29% 2% Total 5,529 13,613,596 3,353,100 71,997 Source: U.S. Bureau of the Census, 2002 Economic Census Businesses Santa Monica was home to over 5,500 businesses and 72,000 jobs in 2002 generating over $3.5 billion in wages28. Businesses are spread throughout the city with the highest concentration located in the downtown area. In 2007, only 30 businesses were reported as having more than 100 employees, and only 9 had more than 500 employees. Table 11 shows that the city's top thirty -two employers represent 29% of the city's jobs and over a third of these come from the top 6 city employers. Another 7,900, or 16% of Santa Monica residents, are self - employed compared to only 9.5% for Los Angeles County and 6.8 %forthe U.S. Table 11: Santa Monica Top Six Santa Monica Education 2,517 3.31% 1,595 2.52% College City of Santa Monica I Government 2,177 2.86% 1,510 2.39% Santa Monica - Malibu Unified Education 1,650 2.17% 1,300 2.06% School District - SaintJohn's Hospital Health Services 1,543 2.03% 1,542 2.44% Medical Center Santa Monica -UCLA Health Services 1,350 1.77/ 1,000 1.58% Hospital MTV Networks Entertainment 1,060 1.39% - - Total Jobs Provided by all 32 Principal 20,192 Employers - Average total jobs in Santa Monica 76,060 All Principal Empl oyers as % of Total Jobs 29% Key Sectors Table 12 shows 14% of jobs in Santa Monica coming from the high -tech, software and entertainment sectors; 30% of Santa Monica's top 30 employers are in these two sectors. Many successful companies from this sector started or are located in Santa Monica including the'Playtone Company' headed by actor 28 US Census Bureau. (2002). US Census Data. Retrieved October 17, 2008 from http: //factfnder.census.gov 29 City of Santa Monica. (2008). Economic & Demographic Profile: Business & Industries. Retrieved October 17, 2008, from http: /MA .santa- monica.org/ business /demographics /2006busind.htm STRATEGY FOR A SUSEAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE CHAPTER 1: OVERVIEW OF THE CITY OF SANTA MONICA 19 G tctl %%/Ole sf"rategies Tom Hanks; Microsoft, Yahoo, Google, Universal, MTV and offices for the Comedy Central show `South Park'. Table 12: Entertainment, High -tech and Software Industries 200612007 MTV Networks Entertainment 1,060 Activision Publishing Inc. Software Developer 800 Symantec Corporation Software Developer 720 Yahoo! Information Technology 477 King World Productions, Inc. Television & Broadcasting 400 Edmunds.com Internet Service 350 Lions Gate Entertainment Entertainment 338 Home Box Office, Inc. (HBO) - Television -Cable 275 Google Information Technology 142 Total Jobs Provided by Entertainment, Software and Hi -tech 10,955 Average total jobs in Santa Monica 76,060 of Jobs from Entertainment, High Tech and Software o 14.4/ Likewise health services are another major industry for the city representing 10% of local jobs. The two major employers in this sector, Saint John's Hospital Medical Center and Santa Monica -UCLA Hospital provide almost 3,000 jobs combined (see Table 11 above). Furthermore, these two institutions are renowned in terms of care, research and education. The tourism sector is a major contributorto city employment and local spending. Accommodation and food services account for 15% of local jobs and retail accounts for another 13 %. Atourism destination, Santa Monica offers travelers 3,500 rooms in 37 hotels30, over 400 restauramS31 and extensive shopping opportunities. Visitors spend $842 million annually (2006), and bring $28.8 million in hotel tax revenues. In addition to regional day trippers (85% of visitors), approximately 4.74 million annual visitors come to the city from outside Los Angeles County for pleasure, vacation, or business. Overnight hotel guests contribute almost 50% of tourist spending (see Figure 3). The tourism sector has proven to be an important contributor to the economic health of Santa Monica32, even during periods of economic decline. 30 CVB (2008).Where to Stay. Retrieved on October 24, 2008 from http:/ hw✓ w. santamonica .comlindex.phpfnotels.hlml 31 Santa Monica Realty (2004): Welcome to Santa Monica. Retrieved on August 24, 2008 http.,IA w . santamonimrealty.coMsantamonica/ 32 City of Santa Monica (2008). Santa Monica at a Glance. Retrieved on August 24, 2008 http: /AmwO1.smgov .net /business /Sm _glance2006.htm 20 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY earvoice. strategies SECTION I: THE CITY'S CURRENT STATE CHAPTER 1: OVERVIEW OFTHE CITY OFSANTA MONICA Figure 3: 2006 Tourist Spending ($842 million per year) Santa Monica has a strong, thriving creative culture which plays a critical role in driving the city's quality of life and economy33. The arts, entertainment and recreation sector is one of the city's defining characteristics, accounting for at least 4 %of alljobs34. However, this percentage does not account for the many independent artists living and working in Santa Monica. The City's Creative Capital report found 43% of residents identifying themselves as working in the arts for apart or all of their living35 ENVIRONMENTAL AND SOCIAL TRENDS The Office of Sustainability and the Environment (OSE) has implemented a number of programs to help create a sustainable Santa Monica. OSE recognizes many of the challenges faced by the city and uses its web portal to record its progress and challenges through a detailed annual reporting of its progress in meeting specific targets defined by the Sustainable City Plan3s Commuting Patterns Regional growth and economic activity has a profound impact on commuting patterns, road congestion, the natural environment and quality of life. As an example, the daytime population in Santa Monica increases by over 50% (42,516) due to patterns established by commuting and tourism influxes. As a pedestrian and bike friendly city with an excellent public transportation system, the entire city is easily accessible and convenient forgetting around car -free. Nine percent of workers walk or use means other than car and transit to commute to work, compared to a 5% county and national average (see Table 13). Commutes outside the city average 23.7 minutes 31 for all modes of transportation. Santa Monica's growth creates major traffic congestion pressures on existing transportation networks38. Traveling north -south is 33 The Reinvestment Fund. (2008). From Creative Economy to Creative Society. Retrieved October 17, 2008, from http: /Nv w, trfund. wnVfesource /domloadstoreatMty/Economy.pdf 34 US Census Bureau. (2002). Selected Statistics by Economic Sector: 2002. Retrieved October 17, 2008, from http: / /factfinder. census. gov/ servl et/GQRTable?_ bm= y&- geo_ id= E6000US0603770000 &- ds_name= ECO200A1 &- _lang =en 35 City of Santa Monica. (2006). Creative Capital: a Plan for the Development of Santa Monica's Arts and Culture. Retrieved October 17, 2008, from http: /MA I.smgov. net/ cmativesantamonica / /documents/Plandraftl2.06.pdf 36 City of Santa Monica. (2007). Sustainable City Progress Report. Retrieved October 17, 2008, from http:/ /www.smgov.netlepd /scprfindex.hlm 37 US Census Bureau. (2005). American Community Survey. Retrieved October 17, 2008, from http:/ Mww. riewgeography .conVcontent/0066 -la- area - average - travel- time-work -2005 21 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY @UYVOICe StYGeI @g( @S SECTION ]:THE CITY's CURRENT STATE CHAPTERI: OVERVIEW OF THE CITY OF SANTA MONICA slow and difficult. Lincoln Boulevard also becomes congested being the main route to the Santa Monica Freeway, Venice and the Los Angeles International Airport. Traffic impacts and mitigation strategies to reduce further congestion impacts are currently being addressed by the LUCE through the strategic linking of land use to transportation so as to effectively manage traffic congestion and reduce automobile trips. Table 13: Commuting to Wore' Source: U.S. Census 2006 Santa Monica is below the national and county averages in terms of transit and carpool options. Fewer than three - quarters of the population commute by single- occupant vehicle and only 8% used carpool and transit for commutes in 2006 compared to 10% on 2000 and 22.3% in 198090. Only one - third (14,789) of Santa Monica's civilian labor force actually lives and works in the city41. This number has been steadily decreasing over the past 20 years, dropping from 36% in 1980 to 35% in 1990 and to 32% in 2000. This decline has occurred during a period of job surpluses in Santa Monica 4'. Forty - two percent of residents working outside Santa Monica work in LA. Likewise, 50.4% of Santa Monica's workforce commutes in from LA, while only 16.7% of city workers actually reside in the city; an issue particularly acute in the tourism sector which has a lot of in- commuting from employees. Table 14: Commuting Patterns f4 ,,,. ",Where Sahtd MOmca's willorkE� gWa k_ra ,d=gWhere 117 co[hfl]Ut111g,worl(erslie5,1(i, �'', 1Nhere Car, Truck, or Van Drove Alone Z: 71% 72% 76% Car, Truck, or Van Carpooled 6% 12% 11% Public Transportation (Excluding �rW�w'nv o�fNlorkers . ��� G1ty' <� � 2% 7% 5% Taxicab) Walked 6% 3% 3% Other Means 3% 2% 2% Worked at Home 11% Mean Travel Time To Work (Minutes) 23.7 28.7 25 Source: U.S. Census 2006 Santa Monica is below the national and county averages in terms of transit and carpool options. Fewer than three - quarters of the population commute by single- occupant vehicle and only 8% used carpool and transit for commutes in 2006 compared to 10% on 2000 and 22.3% in 198090. Only one - third (14,789) of Santa Monica's civilian labor force actually lives and works in the city41. This number has been steadily decreasing over the past 20 years, dropping from 36% in 1980 to 35% in 1990 and to 32% in 2000. This decline has occurred during a period of job surpluses in Santa Monica 4'. Forty - two percent of residents working outside Santa Monica work in LA. Likewise, 50.4% of Santa Monica's workforce commutes in from LA, while only 16.7% of city workers actually reside in the city; an issue particularly acute in the tourism sector which has a lot of in- commuting from employees. Table 14: Commuting Patterns f4 ,,,. ",Where Sahtd MOmca's willorkE� gWa k_ra ,d=gWhere 117 co[hfl]Ut111g,worl(erslie5,1(i, �'', 1Nhere Z: GUU}I �WlereSantaNlgnlca's�laborForce �— '�„CjtY rY ��r � ofWo7�ers orks °�,o�#�UII� e�st� J 1tylNarkers, Npf�Wotkers esld �rW�w'nv o�fNlorkers . ��� G1ty' <� � santa Monica West Hollywood ... ®�� 38 Santa Monica Land Use & Circulation Element. (2008). Chapter 2. Retrieved October 17, 2008, http:lhv wd.shapethetAum2025. net/ PDF /luce_docs /LUCE_Chapter_2.pdf 3e US Census Bureau. (2006). 2006 American Community Survey. Retrieved October 17, 2008, from http: / /factfinder. census. gov /seNlet/ADPTable ?_bm =y &- Teo_ id= 16000US0670000 &- gr_name= ACS_2006_EST G00_DP3 &- contexl= adp & -ds_ name= &- tree_id= 306 & - _tang =en &- redoLog =false &-format= 40 City of Santa Monica. (2007). Economic & Demographic Profile: Employment. Retrieved October 17, 2008, from http: /Mw .smgov.neti business /demographics /2006empmrk.htm 41 City Data. (2008). Santa Monica, California. Retrieved October 17, 2008, from hitp: /Ar .city-dala.com/city/Santa=Monica- Califomia.html 42 City of Santa Monica. (2007). Sustainable City Progress Report- Housing. Retrieved October 17, 2008, from http:1Awvw.santa- monica. org/ epd/ scpr/ EconomicDevelopmenttE3 _JobHousing.htm STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE CHAPTER 1: OVERVIEW OFTHE CITY OF SANTA MONICA 22 ec.rtkvoice, !Aral -egies Source: 2000 US Census, Census Transportation Planning Package; HR &A Inc. City of Santa Monica, Opportunities and Challenges, 2005 Job - Housing Balance Santa Monica's jobs-housing balance rose to 1.52 in 2007 (see Figure 4) moving the city further away from the 1.0 target ratio established in the Sustainable City Plan43. The gap between employment and residence in Santa Monica occur retail, where there are approximately 10,000jobs but only 3,000 residents employed in this sector; and arts, entertainment, recreation, accommodation, and food services where there are approximately 13,400jobs but only 5,000 residents employed in this sector. Excluding government and enterprise professionals, there are over 23,000jobs in Santa Monica that are unfilled by residents. Santa Monica's workforce is primarily skilled "knowledge workers ", with 60% of employed residents working in managerial, professional, and related occupations in 2002 compared to only 40% twenty years earlier44. Figure 4. Job and Housing Balance Source: Sustainable City Progress Report 43 City of Santa Monica. (2008). Sustainable City Progress Report- Economic Development. Retrieved October 17, 2008, from hUp: /A✓ .smgov. net/ epd/ scpr/ Economic0evelopment/Econom icDevelopment.htm _ 44 City of Santa Monica. (2006). Santa Monica at a Glance. Retrieved October 17, 2008, from http: /Nvwvn Ol. smgov .neYbusiness /sm _glanw2OO6.htm 23 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY ggYl I,V0/CC StYQtCg(e5 SECTION I: THE CITY'S CURRENT STATE CHAPTER 1: OVERVIEW OF THE CITY OF SANTA MONICA Santa Monica .lobs Housing Balance Target: Ratio Should Approach 1.0 70,000 1.80 ° 6 0,000 1.70 0 C 50,000 1.60 1.51* m m c 0 40,000 0 F, S f 1.40 c30,000 a 20,000 1.20 Z 10,000- 1.10 ,i 1.00 1998 1999 2000 2001 2002 2003 2004 2005 2006 ----- .___---- . ..._._._... __.._ -_ -, "Preliminary -_® Housing Units_ Total lobs Jobs /Housing Balance I Source: Sustainable City Progress Report 43 City of Santa Monica. (2008). Sustainable City Progress Report- Economic Development. Retrieved October 17, 2008, from hUp: /A✓ .smgov. net/ epd/ scpr/ Economic0evelopment/Econom icDevelopment.htm _ 44 City of Santa Monica. (2006). Santa Monica at a Glance. Retrieved October 17, 2008, from http: /Nvwvn Ol. smgov .neYbusiness /sm _glanw2OO6.htm 23 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY ggYl I,V0/CC StYQtCg(e5 SECTION I: THE CITY'S CURRENT STATE CHAPTER 1: OVERVIEW OF THE CITY OF SANTA MONICA Waste and Energy According to Department of Energy 2002 national statistics, food services, food sales and buildings used in health care consumed the most energy out of all building uses (see Table 15)45. The tourism sector (which includes food services, food sales, lodging and retail) brings major environmental implications to the city including road congestion, pollution, waste generation and energy consumption46. For example, the 2005 solid waste targets set by the city were exceeded by 12%, and it is believed that was partly due to tourism growth. The California Government found that47: • Average -sized hotels purchase more products in one week than 100 families do in a year • Waste generation can be as high as 30 pounds per room per day • Two percent of California's food waste comes from the hotel and lodging industry • Typical hotels use 218 gallons of water per day per occupied room Table 15: Total Energy Consumption by Building Use (USA 2002)" �, v�Al�nerGY cvnaelnylron DI%A) �F+m q�vralor - e c. EleatnErry , - f�at� a ?, - � .... Worship SANTA MONICA's FISCAL POSITION Santa Monica's five -year forecast (2008 -09) indicates balanced budgets with deficits beginning in three years if costs are not managed prudently and /or if revenues do not grow at a greater rate. City -wide revenues, including an additional $23.4 million from Big Blue Bus capital reimbursements received from the Los Angeles Metropolitan Transit Authority, for the coming fiscal year 2008/09 are estimated at $547.3 million. The City's funds and expenditure will total $524.4 million or $6,000 per capita 41. The two largest funds are the General Funds and the Enterprise Funds. 45 Energy Information Administration. (2001). Principal Building Activities in Commercial Buildings. Retrieved October 17, 2008, from http: / /wsnni.eia. doe .govlemeu /wnsumptionbdefs /Cbecs /pbawebsite /summarytable.htm 46 City of Santa Monica. (2008). Sustainable City Progress Report- Solid Waste. Retrieved October 17, 2008, from http: /Amw4Ol.smgov.nettepd /scpr /ResourceConsewafon/RC1 _Solid Waste.htm 47 California Government. (2006). California Green Lodging Program. Retrieved October 17, 2008, from http: // W.civ b .ca.gov /EPP /greenlodging/ 48 Energy Information Administration. (2006). Total Energy Consumption by Major Fuel for Non -Mall Buildings, 2003. Retrieved October 17, 2008, from http: /A v .eia. doe. gov /emeWcbecs /cbecs2003/ detailed— tables _2003 /2003set9 /2003htmVcl.html 49 City of Santa Monica. (2008). Adopted Budget — City ManageYs Message. Retrieved October 17, 2008, from http: /Mnw Ol. smgov. nefnnancelbudget/2008- 09/ A`doptedBudgeVO2 _CityManagerSmessage.pdf. 24 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION is THE CITY'S CURRENT STATE eor W�Cx. SfiYOr� @�l @S CHAPTER 1: OVERVIEW OF THE CITY OF SANTA MONICA Table 16: FY2008 -09 Budget -Funds and Expenditures General Funds The General Fund contributes $252.5 million to revenues, of which 70% or $502 per capita will come from local taxes. Major expenditures paid for out the General Fund include 36% ($90 million) allocated to public safety and 26 %to support services. General Fund revenues come from seven sources; Utility Users tax (13 %), Transient Occupancy tax (15 %), Sales tax (13 %), Property tax (14 %), Business License tax (10 %), Parking tax (<1 %), Real Property Transfer tax (2 %) and all other non -tax revenues (30 %). In general, Santa Monica has a diversified tax base. The following 5 major tax sources each makeup between 10% and 15% of General Fund revenues and provide an estimated $162 million out of the $175 million budget for 2008/09: • Sales taxes reflect retails sales, including new automobile sales, which is one of the City's largest sales tax sources. The total sales tax rate in Santa Monica is 8.25 %. The City's tax rate is 1% with the balance going to the county and state. • Transient Occupancy taxes reflect tourism industry and business travel. • Utility taxes reflect utility consumption and spending. The City's 10% Utility Users Tax (UUT) is applied to electricity, natural gas, telephone (both hardwire and wireless), cable, and water /wastewater services. • Business License tax growth reflects how much business growth and reinvestment occurs in the city. The highest rates of growth are expected to be in the Professional and Service categories. • Property taxes result from Santa Monica's share of the 1% levy on the fair market value of all real property in the city. Santa Monica's share of the 1% levy is approximately 14 -17 %. In the last year property transfer taxes have lowered due to reduced property turn over — number of transfers may reach the lowest level since 1992/9350. Total property taxes collected by the city in FY 2006/07 were $32.6 millionsl Enterprise Funds Enterprise Funds will contribute $144 million to revenues. Some of its Self Supporting Funds, which tend to maintain positive balances include water, wastewater, solid waste and Big Blue Bus (see Table 17). These 50 City of Santa Monica. (2008). 2008109 Adopted Budget. Retrieved October 17, 2008, from http:/ MnvwOl.smgov. nettfinancelbudgeti2008- 09/ AdoptedBudgett2008- 09AdoptedBudget.pdf 51 City of Santa Monica. (2008). Annual Budgets. Retrieved Oct 17, 2008 from http: /AvmwOl. smgov .net /financelbudgeVindex.htm 25 STRATEGY FOR ASUSTAMABLE LOCAL ECONOMY eex - flkvoiee sf"rategies SECTION I: THE CITY'S CURRENT STATE CHAPTER 1: OVERVIEW OF THE CITY OFSANTA MONICA < General Fund $252.5 $2,868 48% Enterprise Funds $144.4 $1,640 28% Redevelopment Funds - $80 $909 15% All Other Funds $32.3 $367 6% Internal Service Funds $15.2 $173 3% Total $ 524.4 $5,956 100% Salaries and Wages $236.70a $2,688. 45% Supplies & Expenses/ Capital Outlay- $159.5 $1,811 30% - Capital improvement $128.2 $1,456 24% Total $524.40 $5,956 100% General Funds The General Fund contributes $252.5 million to revenues, of which 70% or $502 per capita will come from local taxes. Major expenditures paid for out the General Fund include 36% ($90 million) allocated to public safety and 26 %to support services. General Fund revenues come from seven sources; Utility Users tax (13 %), Transient Occupancy tax (15 %), Sales tax (13 %), Property tax (14 %), Business License tax (10 %), Parking tax (<1 %), Real Property Transfer tax (2 %) and all other non -tax revenues (30 %). In general, Santa Monica has a diversified tax base. The following 5 major tax sources each makeup between 10% and 15% of General Fund revenues and provide an estimated $162 million out of the $175 million budget for 2008/09: • Sales taxes reflect retails sales, including new automobile sales, which is one of the City's largest sales tax sources. The total sales tax rate in Santa Monica is 8.25 %. The City's tax rate is 1% with the balance going to the county and state. • Transient Occupancy taxes reflect tourism industry and business travel. • Utility taxes reflect utility consumption and spending. The City's 10% Utility Users Tax (UUT) is applied to electricity, natural gas, telephone (both hardwire and wireless), cable, and water /wastewater services. • Business License tax growth reflects how much business growth and reinvestment occurs in the city. The highest rates of growth are expected to be in the Professional and Service categories. • Property taxes result from Santa Monica's share of the 1% levy on the fair market value of all real property in the city. Santa Monica's share of the 1% levy is approximately 14 -17 %. In the last year property transfer taxes have lowered due to reduced property turn over — number of transfers may reach the lowest level since 1992/9350. Total property taxes collected by the city in FY 2006/07 were $32.6 millionsl Enterprise Funds Enterprise Funds will contribute $144 million to revenues. Some of its Self Supporting Funds, which tend to maintain positive balances include water, wastewater, solid waste and Big Blue Bus (see Table 17). These 50 City of Santa Monica. (2008). 2008109 Adopted Budget. Retrieved October 17, 2008, from http:/ MnvwOl.smgov. nettfinancelbudgeti2008- 09/ AdoptedBudgett2008- 09AdoptedBudget.pdf 51 City of Santa Monica. (2008). Annual Budgets. Retrieved Oct 17, 2008 from http: /AvmwOl. smgov .net /financelbudgeVindex.htm 25 STRATEGY FOR ASUSTAMABLE LOCAL ECONOMY eex - flkvoiee sf"rategies SECTION I: THE CITY'S CURRENT STATE CHAPTER 1: OVERVIEW OF THE CITY OFSANTA MONICA funds fall under the City s Proprietary (Enterprise and Internal Service) Funds, which are used to account for operations that are financed and operated in a manner similar to private business enterprises. Table 17. Self Supporting Funds FY 2008-2009 ($ millions) IMIEZZIMMEEMSE= EM 14.96 13.308 20.966 14.811 Operating Revenues- Charges for Services Non - operating Revenues- investment and rental 0.72 0.908 0.866 91.442 Total Revenue 15.68 14.217 21.833 106.252 Operating Expenses - 15.899 16.061 20.262 88.334 Non - operating Expenses 0.005 1.049 0 0.000 - Total Expenses 16.904 17.11 20.262. 88.334 Balance -1.224 -2.893 1.571 17.918 26 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY ec,rl l�VOiC6 s�- rategies SECTION I: THE CRY'S CURRENT STATE CHAPTER 1: OVERVIEW OFTHE CRY OFSANTA MONICA SUSTAINABLE CITY BACKGROUND Santa Monica has become well recognized as a leader in sustainability. The City's official commitment to sustainability came in 1994 when City Council adopted the Sustainable City Program. The Program was proposed by the City s Task Force on the Environment to ensure that Santa Monica could continue to meet its current environmental, economic and social needs without compromising the ability of future generations to do the same. The program included goals and strategies for the City government and all sectors of the community to conserve and enhance local resources, safeguard human health and the environment, maintain a healthy and diverse economy, and improve the livability and quality of life for all community members in Santa Monica. Since its implementation, the Sustainable City Program has reached or exceeded many of its initial targets. Its 2004 update revised and expanded the City's sustainability goals and the updates provided a more complete picture of community sustainability as well as developing new indicator targets for 2010. The Sustainable City Working Group evaluated the long -term sustainability of Santa Monica using a framework comprised of three forms of community capital: natural capital —the natural environment and natural resources; human and social capital —the connectedness among people in the community and the education, skills and health of the population; and financial and built capital— manufactured goods, buildings, infrastructure, information resources, credit and debt. Overthe fiscal years 2007 -2009 three areas of special focus have been identified as community priorities: homelessness, the Land Use and Circulation Element update and youth. Broad community priorities for the city covered in city documents and policies include: • culture • sustainability • education • customer service • capital needs and infrastructure • recreation and active living • fiscal stability The Office of Sustainability and the Environment (OSE) is charged with protecting the environment and safeguarding public health to create a more sustainable future. The division develops and implements programs to manage natural resources and hazardous materials promote conservation and efficiency efforts and administer and enforce many of Santa Monica's environmental laws. The OSE is responsible for: • The Sustainable City Plan (SCP) • water and watershed conservation • hazardous materials • energy in green buildings • integrating sustainability into municipal operations • encouraging city -wide sustainability practices SUSTAINABLE CITY PLAN The Sustainable City Plan (SCP) was. designed to help Santa Monica to think, plan and act more sustainably by considering the long term impact of current decisions and actions. The program was initially adopted September 20, 1994, updated and adopted February 11, 2003 and then revised October 24, 2006. The 27 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY eptl6voice Str4te6j[eS SECTION I: THE CITY'S CORRENTSTATE CHAPTER2i CRY POLICIES AND PROGRAMS FOR A SUSTAINABLE LOCAL ECONOMY current plan includes a set of 8 goals and strategies that conserve and enhance local resources, safeguard human health and the environment, maintain a healthy and diverse economy, and improve the livability and quality of life in Santa Monica. The City has taken a proactive approach to implementing sustainability programs and has made a great deal of progress towards these goals. The 8 broad goals and a number of significant accomplishments (from the 2008 Sustainable City Report Card) related to each one are listed below: Resource Conservation Solar Santa Monica was launched to deploy energy efficiency, solar energy and clean distributed generation into the community and create the potential of becoming a net zero energy community. • 20 solar projects were installed last year The main branch of the Santa Monica Public Library received Leadership in Energy and Environmental Design (LEED) certification last year. • The City's food waste composting program kept more than 3 million pounds of food waste from Santa Monica restaurants out of the landfill last year. Environmental and Public Health • Santa Monica voters approved the Clean Beaches and Ocean parcel tax which will fund a comprehensive 20 -year plan to improve water quality in Santa Monica Bay • More than 1, 040,000 people annually visit four thriving farmers' markets with locally grown and organic produce • The amount of recycled water from the Santa Monica Urban Runoff and Recycling Facility (SMURRF) used in the city increased 35% to a total of 32 million gallons peryear • The Household Hazardous Waste Facility kept more than 133,000 pounds of hazardous materials out of the landfills Transportation 85% of the municipal fleet transitioned to alternative.fuel • Big Blue Bus uses almost 100% alternative fuel the bike valet program parked 16,310 bikes Economic Development Santa Monica's economy remains strong and diverse with growth in the tourism, retail, and information sectors. Efforts are underway to strengthen the local economy, promote sustainable business practices and attract and retain sustainable businesses. Over 30 businesses were recognized for their commitment to sustainable practices under the Green Business Certification program. Open Space and Land Use • Airport Park and Euclid Park opened this year (more than 8.3 acres of new and renovated park space) • there are 245 acres of state beach and 26 community parks Housing preserving existing stock of affordable rental units �r 28 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY epYI I�VO�Ce StYQt6g�4's SECRON I: THE CITY'S CURRENT STATE CHAPTER2: CRY POUCIESAND PROGRAMS FOR ASUSTAINABLE LOCAL ECONOMY - • In 2007, the City delivered 118 units of affordable housing and another 389 units are in development52. • The City's progressive legal protections have helped to keep 40% of the controlled units affordable to low and very -low income tenants. Community Education and Civic Participation • community participation has been consistently high: more than 350 people participated in the neighborhood place making workshops • more than 100 people participated in the industrial lands workshop • more than 12,000 people attended this year's zero waste community festival Human Dignity • Community Development Grants Program provided over $7.6 million to support local family, disability, employment and homeless services. • Last year, more than 2,700 homeless persons received case management and employment assistance - 1,116 people were placed in housing and 502, people found jobs. SUSTAINABLE CITY IMPLEMENTATION PLAN" The Sustainable City Implementation Plan targets three of the eight Sustainable City Plan goals listed above as priorities for implementation, and recommends specific strategies for implementation. The three goals were selected by an 11 member appointed Sustainability City Task Force (SCTF). The three priority areas chosen and the reasoning behind these choices are shown in Table : If!I rLq -_rqF 1t;i!E7 Resource Significantly decrease overall community Participation is required. Conservation consumption, specifically non - local, non- Stakeholders can learn from each . renewable, non - recyclable and non - recycled other. Actions are effective, materials, water, and energy and fuels. replicable and cost effective over Within renewable limits, encourage the use of the long term. local, non - polluting, renewable and recycled - resources. Environmental & Minimizing and where possible eliminating Participation is required. Public Health hazardous or toxic materials, air, soil and water Stakeholders can learn from each pollutants and the risks that environmental other. Actions are effective, problems pose to human and ecological health. replicable and cost effective over Ensure that no one geographic or socioeconomic the long term. group in the city is unfairly impacted by environmental pollution: Increase consumption of fresh, locally produced food. 52 City of Santa Monica. (2008). Sustainable City Report Card. Retrieved Oct 17, 2008 from http: /Aw wOl .smgov. net/ epd /scpr /SCRC- ReportCard- 2008.pdf 53 City of Santa Monica. (2006). Sustainable City Implementation Plan -Section 1. Retrieved October 17, 2008, from http: /Aw .smgov.net/EPD /SC Task_Force /agendas/ 2008 /Attachments/Feb /Attachment %203- SCPIP %2OSection1.pdf ! ��.rr 29 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY eC•r0%%/01ce StrGtegie5 SECTION[: THE CITY'S CURRENT STATE CHAPTER2: CITY POLICIES AND PROGRAMS FOR ASUSTAINABLE LOCAL ECONOMY - Economic Nurture a diverse, stable, local economy that Development supports basic needs of all segments of the community. Ensure businesses, organizations and local government agencies within Santa Monica continue to increase the efficiency of their use of resources through the adoption of sustainable business practices. LAND USE & CIRCULATION ELEMENTS54 Santa Monica lacks a coordinated, forward looking economic development strategy to maintain a strong and diverse economy and to meet other economic goals. The Land Use and Circulation Element (LUCE) update is a living document which represents and guides Santa Monica's vision as an environmental, social and economically sustainable city by integrating environmental, land use, economic, transportation and social concerns to 2025. The LUCE utilizes many of the findings and baseline information from two previous initiatives: Initial Outreach, Assessment and . Emerging Themes report and Opportunities and Challenges. Both reports fare summarized later in this section. The LUCE seeks to maintain Santa Monica's "beach town" character while enhancing and enriching community livability. The LUCE plays a key role in creating a strong future for Santa Monica. Once adopted, the policies and recommendations from the LUCE framework will direct new investment and govern land use policies, thereby assuring appropriate land uses, and suitable locations, quantity and quality of development. The LUCE will receive an additional one -time funding in the amount of $300,000 for its completion and implementation in 2008/095s The following pages present a discussion of the six key "framework elements ", developed in May 2008, intended to guide the LUCE strategy framework. 1. Neighborhood Preservation and Enhancement Protect and preserve the character and scale of Santa Monica's neighborhoods. In August 2008 Council directed that actions to protect and preserve Santa Monica's neighborhoods, comprising over 94% of the.city, be aggressively and quickly implemented'. Strategies: • new buildings are not to encroach onto, or adversely impact, existing neighborhoods • encourage the provision of ground level open space and appropriate set -backs along neighborhood streets • create "complete" neighborhoods, with easy access and walking distances to the needs of daily life • recognize that streets aresignificant elements of Santa Monica's open space pattern, and that sidewalks are part of the "pedestrian realm" • encourage connectivity between and among residential neighborhoods and nearby boulevards through pedestrian walkways, greehways, plazas, bike trails and open space 54 City of Santa Monica. (2008). Shape the Future. Retrieved October 17, 2008, . from http :limmv.shapethefulure2025.net/ 55 City of Santa Monica. (2008). Adopted Budget 2008109 —planning and Community Development. Refdeved October 17, 2008, from http: /Aw wOl.smgov.netifinance /budgett 2008- 09/ AdoptedBudget/09 _DeptSum_09_PCD.pdf 56 City of Santa Monica. (2008). Shape the Future. Retrieved Oct 17, 2008, from http : //wmv.shapethefuture2025.neU 30 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY 6P - (J�voic6 SfYRtegieS SECTION I: THE CITY'S CURRENT STATE CHAPTER 2: CITY POLICIES AND PROGRAMS FOR A SUSTAINABLE LOCAL ECONOMY 2 Integrated Land Use and Transportation Locate future activity centers on existing and proposed transit corridors to create a greener land use pattern. Along with existing infrastructure, this will help reduce driving and vehicle dependency and increase public transit, walking and biking in the city. Strategies: • locate new activity centers along existing and proposed transit corridors • boulevard policy re- orients the heavily auto - dependent retail and commercial services along the city's major corridors • integrate land -use and transportation goals with the 10 distinct commercial, civic, institutional and recreational /open space Districts • develop transit villages - transit stations are being considered for Bergamot Station, a downtown station near Fourth Street and Colorado, and possibly a mid -town station near Memorial Park • focus investment around the proposed Bergamot Expo station and develop the Bergamot Transit Village district as a high - quality, mixed use area • develop a downtown light rail station and redevelop around the station to strengthen the area's connection with the Civic Center, the beach and the pier • reinforce the City's affordable housing programs and require additional neighborhood amenities and service to create "complete neighborhoods" 3. Pro-active Congestion Management Proactively fight traffic and prevent new net private auto trips. Strategies'. • policies to reduce future work, shopping and residential trips • locating new development along transit corridors • requiring a comprehensive Transportation Demand Management (TDM) approach throughout the city • create and, enhance existing Business Improvement Districts • establish management associations and /or community benefit districts to help manage parking and minimize traffic through alternative programs create "complete neighborhoods" with needed services within walking distance provide comfortable sidewalks, new bike paths and facilities to connections among neighborhoods • require new development to minimize car trips, and assess impact fees to mitigate remaining trips; fees can be directed towards sustainable transportation options 4. Public Benefit Meet the community's values and expectations by ensuring new development contributes public benefits. The three public benefits identified are congestion reduction requirements, community physical and social benefits, and, new affordable and workforce housing. This framework allows the city and community to shape how development can contribute to the city and provides modest incentives for revitalization areas. Strategies: "performance -based zoning" that establishes a set base height development greater than the base height of 32' must be accompanied by a range of public benefits 31 STRATEGY FOR ASUSFAINABLE LOCAL ECONOMY SECTION: THE CITY'S CURRENTSTATE �'C•Y VO[C6 C'S S�YC[� @�[ CHAPTER2: CITY POLICIES AND PROGRAMS FOR ASUSTAINABLE LOCAL ECONOMY S. Urban Character and Form Shape key elements of the public and private realm to be livable and green while contributing to the city's sense of place. Quality development and good urban design and architecture are seen to contribute to the attractive character of Santa Monica. Strategies: • mixed -use buildings • appropriately scaled buildings and street fagades • creating parking districts with shared parking • ensuring streets are safe, well lit and pedestrian and bike friendly • boulevards with 'walkable' residential based, mixed use centers • enhance pedestrian, bike and small shuttle connections • existing housing stock should be respected and preserved • new buildings should be compatible in scale and size with surrounding architectural elements 6. A Sustainable Santa Monica Comprehensively provide for a higher quality of life as the city evolves through balancing the Sustainable City Plan with the LUCE. The LUCE fits into the 8 sustainability goals: • Transportation: Reducing the reliance on the automobile and creating a multi -modal transportation system, by locating new development around transit and emphasizing alternative transport. • Economic Development: Creates opportunities for personal and community growth and contributes to a diverse economy by identifying specific areas where new investment can be accommodated. This investment could contribute to the expansion of the local tax base for a continued provision of a high level of public services, promotion of the arts community, the creation of jobs, additional workforce and affordable housing, and new neighborhood - serving uses. • Open Space and Land Use: Link the creation of transit villages to the Exposition Light Rail line and activity centers at strategic places along the Boulevards, to create complete neighborhoods served by plazas, gathering places, pathways and bike trails. • Housing: Assigning a low base allowance for height and density of new development, and providing significant incentives for including a range of housing types, particularly workforce and affordable housing. • Human Dignity: Secure a high standard of living and respond to the needs of residents for local services and jobs. Serves as an important force in the promotion of social equity and diversity. Initial Outreach, Assessment and Emerging Themes The "Initial Outreach, Assessment and Emerging Themes' report was the first community outreach process used to evaluate the 1984 General Plan to help identify and plan Santa Monica's future. Through community consultations twelve emerging themes were identified: • a unique city with a strong sense of community • a city rich in amenities, within walking distance to shops and services from neighborhoods • a diverse and inclusive city • a community built at an appropriate town scale • a city of strong neighborhoods protected from commercial and industrial uses • a pedestrian and bicycle friendly place �rr 32 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY EQY[►,vo1C� Strctt [eS SECTION is THE CITY'S CURRENT STATE CHAPTER 2: CITY POLICIES AND PROGRAMS FOR ASUSTAINABLE LOCAL ECONOMY • a city rich in its array of transit offerings • a city where traffic and transit work • a city of balanced growth • a city with attractive boulevards • a safe and secure community • an environmentally sustainable place Opportunities & Chal1enges51 The opportunities, status and trends of the above themes were further evaluated in the "Opportunities and Challenges" report. The Opportunity and Challenges report addresses the community s long term land -use and transportation vision for Santa Monica. In addition, four "focus areas" were identified as a starting point for further discussion, studies and planning efforts.. The four focus areas are linked to the themes identified in the "Initial Outreach, Assessment and Emerging Themes" report discussed earlier. This material contributes to the city's shared vision of the future and offers a policy framework to guide land use decisions and mobility issues. If, lj1r4IrVX/JililQiOf ill f 4lR11L]A11611 A,1411,T- ItW'M;IfA Boulevard. Commercial 1,2,4,6,7,8, 9,10 • Have locally- oriented retail and service • Served by Rapid Bus • Expo line and Rapid Bus corridors represent opportunities for transit - oriented development and mixed -use development • Represent specialty shopping districts • Feature a mix of residential and commercial uses and all are Specialty 145689 10 low -scale Commercial • Number and intensity of potential transition sites low • Identified as favorable area that can serve as a model • Protected through the LMSD and M -1 zoning rules • Fading industrial demand for manufacturing land is resulting in a renewal as office, service commercial, and residential Industrial 3,4,5,6,7,8, 9,10 • Has a high potential for transition over the next 20 years • Exposition Rail Line provides an opportunity to foster transit - oriented development 57 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from http:IAm . shapethefuture2025 .neUPDF /oc_report — web.pdf 33 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE ecnr voice s- trafiegies CHAPTER 2: CITY POLICIES AND PROGRAMS FOR A SUSTAINABLE LOCAL ECONOMY • Terminus of highway and transit systems • Popular destination • Long been a business center Downtown 1,2,4,6,7,8,9 • Has become a regional shopping destination • Renewal as a residential neighborhood • Mixed -use residential projects have transformed 6th and 7th streets * #1: Sense of Community, #2: Amenities within Walking Distance, #3: Diversity and Inclusion, #4: Town Scale, #5: Strong neighborhoods, #6: Pedestrian and Bike Friendly, #7: Transit, #8: Traffic and Parking, #9: Balanced Growth, #10: Attractive Boulevards COMMUNITY WORKSHOP ON GANG VIOLENCE"e Gang violence has a major impact on community sustainability and livability. In 2005 Santa Monica and the State Senator hosted two Community Workshops on Gang Violence in an effort to reduce gang activity in Santa Monica. These workshops led to a set of Action Strategies intended to: • Promote a sense of belonging, respect and identity • Reflect cultural /ethnic sensitivity and competence • Involve individuals and institutions community wide • Be strengthened through improved resource coordination and interagency communication In 2003, Santa Monica began developing a gang prevention strategy as one of its three community priorities to "enhance the quality of life, safety, and community involvement of residents of the Pico neighborhood". '9 The 'City of Santa Monica's 2006 -07 Youth Budget' provided a $21.8 million commitment to provide services to youth including those that involve the Santa Monica - Malibu Unified School District, neighborhood groups, Police Department, and non - profit organizations. In the 2008/09 fiscal year, 36% ($90.5 mil) of the General Fund budget will be allocated to public safety". CREATIVE CAPITAL81 The Creative Capital plan offers a vision and a plan forthe city's continued cultural development. The plan aims to support the arts, cultural activities, entertainment and education in Santa Monica so that they continue to benefit the city's residents in their life, work and neighborhoods. Both public and private resources will be called upon to implement the plan over a 10 year period. Residents of Santa Monica value arts and culture as an integral part of civic life and inseparable to "what makes Santa Monica exceptional, desirable and economically competitive ". This sector helps stimulate the economy, generates employment (43% of Santa Monica adults make all or part of their living in arts- related fields) and tourism and contributes to local civic engagement. 6a City of Santa Monica. (2008). Stop Gang Violence. Retrieved Oct 17, 2008, from hUp:/ M✓ . smgov.neUresldents /sgvfndex.htm 59 City of Santa Monica. (2008). Stop Gang Violence. Retrieved Oct 17, 2008, from hftp: /tv✓r . smgov.neYresidents /Sgvfindex.htm "o City of Santa Monica. (2008). Adopted Budget 2008109 - City Manager's Message. Retrieved Oct 17, 2008, from http: /M wwOl.smgov.netlfinance/budgett 2008- 09/ AdoptedBudget tO2_CityManagerfessage.pdf 61 City of Santa Monica. (2005). Creative Capital. Retrieved Oct 17, 2008, from hUp: / /arts.smgov. net / Santa% 20Monica %2OCreative %2OCapital %20PIan %20_8- 07_.pdf ��.rr 34 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY gp likvo/CS SfrPt@gl @S SECTION I: THE CITY'S CURRENT STATE CHAPTER 2: CITY POLICIES AND PROGRAMS FOR A SUSTAINABLE LOCAL ECONOMY The arts have along tradition in Santa Monica and residents are very active in the cultural life of the city, both as professionals and participants. However, the arts sector is currently threatened by real estate pressures. To address these issues and to fulfill Santa Monica's cultural vision, three strategies were developed: 1. Celebrating Innovation: leveraging identity and fostering innovation and partnerships across sectors. 2. Increasing Cultural Participation: expand programs and increase access and programs through marketing, festivals, integration of cultural programming and public art. 3. Enhancing Sustainability: for arts and culture in Santa Monica, including the maintenance or creation of cultural facilities, cultural funding and leadership support. I AM SANTA MONICA 12 "I am Santa Monica" is an interactive workshop designed to encourage employees of Santa Monica businesses to become better informed about the city and variety of offerings. The aim is to allow businesses and their employees to become information resources for city visitors. This program is free and through a workshop and city tour participants are confirmed as Information Ambassadors forthe city. SMALL BUSINESS DEVELOPMENT CENTER" The Santa Monica College Small Business Development Center is part of a 38- center network throughout California. These centers serve the small business owner and entrepreneur offering a wide variety of services for existing and potential small business owners. The center is dedicated to: • assisting small business start -ups • businesses expansion and development • promoting minority and women -owned business • creating and retaining jobs CONCLUSION The following table summarizes the programs outlined above. It ties these programs into the key indicators from the Sustainable City Plan (e.g. air, water, energy, etc). These indicators will be further reviewed in Chapter 4. 62 Santa Monica Convention and Visitors Bureau. (2008). f am Santa Monica. Retrieved Oct 17, 2008, from h0p:11�Jamsantamonica.conv 63 Small Business Development Centers. (2008). Retrieved Oct 17, 2008 from hftpJ/�.smc.edLdsbdc/ 35 STRATEGY FOR A SUS TAINABLE LOCAL ECONOMY gdYtkVo1Ce Strctt6�i@S SECTION I: THE CITY'S CURRENT STATE CHAPTER 2: CRY POUCIES AND PROGRAMS FOR ASUSTAINABLE LOCAL ECONOMY 11I}7P4F41JW SL1f4/1iL• /RYQ Avoid non - local, non- renewable, non - recyclable and non - recycled materials Encourage use of local, non - polluting and recycled water Encourage use of local, non - polluting, renewable energy Decrease overall community Nurture a diverse, stable, local economy that supports basic needs of all segments of the community Integrate land use and transportation; Locate new activity centers along existing and proposed transit corridors; Congestion reduction requirement for new developments; Parking districts with shared parking; Green building requirements Energy- saving design for new buildings Green building requirements New affordable and workforce housing; "Performance -based Zoning" contributes to a diverse economy Youth employment opportunities: mentorships; Businesses partnerships; Preparation and skill and a regional plan for job- related youth Marketing collateral to encourage alternative transportation. Employment opportunities for creative professionals will be encouraged. 36 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY gQYI►'vo c6 St —iti X65 SECTION I: THE CITY'S CURRENT STATE CHAPTER2: CITY POUCIESAND PROGRAMS FOR ASUSTAINABLE LOCAL ECONOMY OBJECTIVES The movement towards economic sustainability is gaining momentum in cities around the U.S. Urbanization pressures have spurred many cities to look closely at their role as possible change agents in adopting sustainable thinking, planning and practices. Santa Monica's can be strengthened by looking at efforts made in cities elsewhere. In the U.S. there are a select number of cities at the fore of promoting green economies. Santa Monica has been benchmarked against five of these cities to gauge its sustainability progress as well as to identify opportunities to learn from these cities. The cities chosen were: • Pasadena, CA • Santa Barbara, CA • San Francisco, CA • Portland, OR • Seattle, WA These cities were measured across fourgroups of indicators, presented in the following tables: Table 21 outlines a basic group of demographic and geographic indicators. Population and household descriptions, population density, land area and education levels give an outline of each city. Table 22 profiles each city's fiscal context. Total revenues, city debt and expenditures in key areas are presented. Table 23 presents a series of economic indicators including unemployment, income, poverty, occupation and industry composition and household ownership. Table 24 looks at air, water, waste and transportation figures to set the state of Santa Monica's environment in context. METHODOLOGY The cities were specifically targeted according to their relevancy to Santa Monica and the study of sustainable local economies. Certain conditions for data gathering were also necessary including availability and accessibility of data sources as well as the comparability of data across the six cities. A further consideration was the desire for similar indicators as those used in city planning documents. The data sources used were: • U.S. Census: 2000, 2002 and 2006 • The California State Controllers Office • .individual city budgets • internet sources. DISCUSSION Table 21 shows two distinct city groupings. The first group, consisting of Santa Monica, Pasadena and Santa Barbara, are cities with small land areas and medium sized populations. The second, including San Francisco, Portland and Seattle, are conventional urban centers with larger populations and land masses. Santa Monica has fewer young people (in the under 24 cohort) than similarsized cities like Pasadena and Santa Barbara. The city's population distribution and population density more closely resembles San �r 37 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY @pYthVOiCe StYpt@g[eS SECTION I: THE CITY'S CURRENT STATE CHAPTER3: COMPARING SANTA MONICATO OTHER SUSTAINABLE CMES Francisco, a much larger city. Santa Monica's high population density signifies environmental pressures akin to those found in larger urban centers. Table 21 also points out two distinct features of Santa Monica: small household sizes and a highly educated population. Table 21: Demographic Indicators Table 22 shows Santa Monica faring very well relative to other cities with respect to its fiscal position. The City's per- capita revenue generation and spending is second only to San Francisco. The ability to generate more revenue per capita than similar sized cities, and even some of the larger cities, puts Santa Monica in the enviable position of having a solid economic base from which to finance sustainability programs. Santa Monica is also one of the most solvent cities when compared to the much bigger debt loads carried by Portland and San Francisco. 64 US Census Bureau. (2006). Quick Facts. Retrieved on October 17, 2008, from �.census.gov 65 US Census Bureau. (2006). American Community Survey. Retrieved on October 17, 2008, from vvv,AV.census.gov ss US Census Bureau. (2006). American Community Survey. Retrieved on October 17, 2008, from v .census.gov Population 25 years and older - �r 38 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY gpYl►'tVO�C6 SYYdfeg/6S SECTION I: THE CITY'S CURRENT STATE CHAPTER3: COMPARING SANTA MONICATO OTHER SUSTAINABLE CITIES iltio.icFn Pas,.e a .. ,. ° Baklia ,s.:. raneiseg Po tr ;r. Pop IFjo`n 'SY ka - cig oPulat 10 din to ® ® ®�® y P,gprvlattan 8 °s�Papul�atton25.�.�, VIM�atlOp °o Popuian 65 And g�end Areg Square �111ilesj �Pop�Ii�ticlrtOenSity�zx� ,Per Squate Mlle � .�: ® ®® ' �r: Householtls IS- Grad au tos8 `" 1xe64g ac a Table 22 shows Santa Monica faring very well relative to other cities with respect to its fiscal position. The City's per- capita revenue generation and spending is second only to San Francisco. The ability to generate more revenue per capita than similar sized cities, and even some of the larger cities, puts Santa Monica in the enviable position of having a solid economic base from which to finance sustainability programs. Santa Monica is also one of the most solvent cities when compared to the much bigger debt loads carried by Portland and San Francisco. 64 US Census Bureau. (2006). Quick Facts. Retrieved on October 17, 2008, from �.census.gov 65 US Census Bureau. (2006). American Community Survey. Retrieved on October 17, 2008, from vvv,AV.census.gov ss US Census Bureau. (2006). American Community Survey. Retrieved on October 17, 2008, from v .census.gov Population 25 years and older - �r 38 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY gpYl►'tVO�C6 SYYdfeg/6S SECTION I: THE CITY'S CURRENT STATE CHAPTER3: COMPARING SANTA MONICATO OTHER SUSTAINABLE CITIES With the exception of its spending on water, Santa Monica's emphasis on building sustainability infrastructure is supported by where it directs its budgetary expenditures. Compared to other cities it ranks high in spending on community development, housing, transit and waste management. Seattle is a notable outlier, ranking either first or second out of all the cities on sustainability infrastructure. Table 22. Fiscal Indicators �¢7 ..— n.DtFa:_. s jgpn BOMB— �x c� fa Fs�ngco Ks. .. lana searne.. B tlg halfl- kS s 9 v 6tal Revenue ($DDDs) r Reen15e Generatron� ffi efVCapita_ NOR ® ® ® ®® iata'� I ��pe,�ndlture�� ®� r''Expe 1 t ru es Per������ AN TOt �gT..setD 6CPer..� " A�atft[a= {PgPerson) Table 23 clearly shows a thriving, highly functioning economy in Santa Monica; a point underlined by its economic performance relative to the other Californian cities, Portland and Seattle. The city has high median, mean and per capita household incomes as well as low levels of annual unemployment and 67 California Stale Controller's Office. (FY 2005 -06). Local Govemment Annual Financial Reports. Retrieved October 17, 2008, from hftp://wv✓w.sco.ca.gov/pubs/index.shtml#locgovrep 68 Portland and Seattle City Budget Archives. (2006). Budget FY2065 -06. Retrieved October 17, 2008, from www. portiandonline .com/omffindex.cfm7c =41035 and http: /A✓ . seattle. gov/ financedepartment/budgetarchives .htm 39 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION 1: THE CITY'S CURRENT STATE - @pY VOiC6 StYPt6. [6S CHAPTERS: COMPARING SANTA MONICATO OTHER SUSTAINABLE CRIES people living below the poverty level. An advantage of Santa Monica's affluence is the substantial buying power that can be harnessed to assist in developing sustainability programs. The composition of jobs by industry and occupation is very similar across the six cities. Santa Monica has two exceptions. The first is the importance of the information industry in the city. The second is the much higher proportion of management, professional and related occupations relative to other cities One economic struggle Santa Monica faces is with affordable housing. California as a whole is an expensive place to live, with median home prices hovering around or above a million dollars. Even in the Californian context, the median cost of a home in Santa Monica is appreciably higher; a fact that is also reflected in the much higher ratio of renters versus home owners in the city. Many of Santa Monica's residents are concentrated in high paying industries and occupations and so are able to shoulderthe higher housing costs. However, the City will face issues in attracting a more diverse array of residents, occupations and industries if it is not able to address the continually rising cost of housing. Table23. Environmental Indicators Santa F _ . w NfP,hre € r$a kasatlena� w �L arbar� San �`t Ya�cisco ortlaIn _ z p x oil " Qatt e i AtrQuahty d x�9 �a © K ® ®��� WaterQuahtylndexaB ® aL ®� ® ®® Total Hogsehaid�r� ® Waste Disposal (Ton4 ? r i PgrYear(7° ® ® ® ®® To at ,s, ld Behold ® Waste erHo �(TpnsPerYear)S9 �-��= n ® ®®®® To Lta Bu tness/aste j ® posal`,TOnsP2r'�s;�+ ��� ® ® ® ®® �perTwo BUS`nessWaste;.. ® �8us r��ess �Torf �� r ® ® ® ®® r~PecEilnplo�ee) ,' Lantlfill u�grswnr Transportation s Meai�Travel7ime t ® �livorhlMdnutea)? I ® ® ® ®® 69 Environmental Protection Agency. (2008). Airand Water Quality Retrieved October 17, 2008, from www.bestplaces.net Scale -1 (worst) -100 (best) USA avg (air) = 48; USA avg (water) =55 70 California Integrated Waste Management Board. (2005). California Waste Stream Profiles. Retrieved October 17, 2008, from http: /Av .ciwmb.ea.gov/Profiles/ 2005 figures shown; 1995 =base year 71 US Census Bureau. (2006). American Community Survey. Retrieved on October 17, 2008, from w ..census.gov 40 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY �,r SECTION I: THE CITY'S CURRENT STATE eckr VOrCe StYOtfegies CHAPTER 3: COMPARING SANTA MONICATO OTHER SUSTAINABLE CITIES Table 24 shows the poor air quality in all of the cities with Santa Monica, Pasadena and Seattle having particularly acute air quality problems. Santa Monica's high levels of traffic congestion and its dense population are linked to poor air quality. Some congestion can be explained by the low percentage of its residents who commute using public transportation. An indicator that is inconsistent with the city s high level of transit spending. The three larger cities have the residential and business densities that make for viable public transit systems. For instance, nearly a third of San Francisco uses public transit to get to work compared to Santa Monica's meager 2.4 %. This figure hides the popularity of Santa Monica's Blue Bus which is used mainly by non - resident commuters into Santa Monica.. A notable exception is Santa Barbara, which has noticeably shorter commute times despite its low percentage of residents using publictransit. The level of public transit use is likely to experience a marked increase if the planned 2012 introduction of light rail comes to the city. Water quality in Santa Monica is in line with American averages. The city's water quality could be improved despite the slight advantages it enjoys when compared to its Californian counterparts in Santa Barbara and San Francisco. In considering local sustainability, Santa Monica should not encourage industries that negatively influence the quality of its air or water. Santa Monica has high landfill diversion,rates in addition to the low tonnage of waste generated peryear by each of the city's businesses and residents. These successes are in -step with its municipal expenditures in this area. Even with these achievements, it could learn from the effectiveness of San Francisco's programs which ranks first in all of the waste indicators studied. Table24: Economiclndicotors s — n M9 n a }, as end g`A`San at larpaia . S`a y tattcisco. ottlanii: Seattl way""Mai Seattle Table 24 shows the poor air quality in all of the cities with Santa Monica, Pasadena and Seattle having particularly acute air quality problems. Santa Monica's high levels of traffic congestion and its dense population are linked to poor air quality. Some congestion can be explained by the low percentage of its residents who commute using public transportation. An indicator that is inconsistent with the city s high level of transit spending. The three larger cities have the residential and business densities that make for viable public transit systems. For instance, nearly a third of San Francisco uses public transit to get to work compared to Santa Monica's meager 2.4 %. This figure hides the popularity of Santa Monica's Blue Bus which is used mainly by non - resident commuters into Santa Monica.. A notable exception is Santa Barbara, which has noticeably shorter commute times despite its low percentage of residents using publictransit. The level of public transit use is likely to experience a marked increase if the planned 2012 introduction of light rail comes to the city. Water quality in Santa Monica is in line with American averages. The city's water quality could be improved despite the slight advantages it enjoys when compared to its Californian counterparts in Santa Barbara and San Francisco. In considering local sustainability, Santa Monica should not encourage industries that negatively influence the quality of its air or water. Santa Monica has high landfill diversion,rates in addition to the low tonnage of waste generated peryear by each of the city's businesses and residents. These successes are in -step with its municipal expenditures in this area. Even with these achievements, it could learn from the effectiveness of San Francisco's programs which ranks first in all of the waste indicators studied. Table24: Economiclndicotors s — n M9 anta� f¢a Pasa n Slits ga b ra Franct co '71 Portl t d PAN way""Mai Seattle 2pp6AverageAnnual Unemployment % tz "` �? ==mom Median Household Income n ® ® ® ® ®® (gollars)73 Mean Household Income (Dollars�� x INA perapita Income's t 72 Bureau of Labor Statistics. (BLS). Employment Data, State of the Cities Data System. Retrieved on October 17, 2008, from 73 hftp:/Amw.bis.govAau/home,htm US Census Bureau. (2006). American Community Survey. Retrieved on October 17, 2008, from wwvr.oensus.gov In 2006 inflation- adjusted dollars ��.rr 47 STRATEGY FOR ASUSFAINABLE LOCAL ECONOMY - L+Gt tkvoic St -up ( @S SECTION I: THE CITY'S CURRENT STATE - CHAPTER3: COMPARING SANTA MONICATO OTHER 5USTAINABLE CITIES A- Professional, Scientific, Management, Administrative and Waste Management, Health Care, Social Assistance C - Information D - Other Services E -Arts, Entertainment, Recreation, Accommodation and Food Services F- Retail trade and Manufacturing G - Manufacturing H - Management, Professional and Related Occupations I- Sales and Office Occupations J - Service Occupations 74 US Census Bureau. (2006). American Community Survey. Retrieved on October 17, 2008, from vwAV.census.gov 75 Best Places. (2008). Cost of Living. Retrieved October 17, 2p08, from vw✓w.bestplaces.net U.S. median home cost - $217,200 42 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY HpYVO1Ce SfYQt @(�. �+eS SECTION 1: THE CITY'S CURRENT STATE CHAPTER3: COMPARING SANTA MONICATO OTHER SUSTAINABLE CITIES OBJECTIVES A model of resource consumption and pollution generation was developed using a mix of key indicators from the Sustainable City Plan and data from the Sustainable City Progress Report. The purpose of the model is to provide the City of Santa Monica with an easyto interpret, flexible tool to monitor progress toward sustainability goals set for 2010. METHODOLOGY The model was developed using a selection of existing economic sustainability indicators from the Sustainable City Progress Report. Indicators were chosen fortheir impact on both resource conservation /pollution generation and economic development. Indicators were left out of the model if they were not applicable to the City's economic base, if the City did not have the powerto affect changes in those areas or if data was not available. Data was gathered from the source data files from the Sustainable City Progress Report's for each area in the report and data values were normalized from the year 2000 baseline to the 2010 targets. The normalizing process consists of re- calculating each data point as a percentage between 0% and 100 %, with 0% being the value during the base year (2000) and 100% being the target value (for 2010). The City's progress with respect to these indicators was translated into two types of graphs: a 2 -D line graph and a Rose diagram. Either graph can be updated by the City with new data so as to increase its long- term usability and. flexibility. City staff may select the most easily interpretable graph in order to facilitate communication and discussion. Additional analysis was carried out to determine if it was possible to obtain data on the selected resource consumption /pollution generation indicators broken down by industry sector. The data sources used for resource consumption /pollution generation impact by sector are City data forthe fiscal year 2005/2006. These were analyzed with respect to Sales /Shipment Receipts data from the 2002 Census, also used extensively in Chapter 1. The methodology used to analyze the data was, wherever necessary, to map the City categories to the Census categories for ease of comparison. Once the categories for City data and Census data were matched, it was possible to calculate resource intensity per dollar of sales. Given that the City data and the Census data are for different years and that the City data had to be mapped onto the Census categories (which is not an exact science), the industry ranking by resource consumption per sales should be viewed as a indicating a reasonable ordering of the industries according to this criteria but not as accurate estimates of resource consumption per sales for individual industries. While all indicators were considered, not all can be measured by industry, and not all have industry data available. For example, while it is possible to get data on greenhouse gas emissions city -wide, in orderto get data by industry it would be necessary to do an inventory on all businesses in Santa Monica and to aggregate the results by industry, a prohibitively time consuming and costly process. Similarly, while Average Vehicle Ridership, Renewable Energy Use, Diverted Solid Waste, and Wastewater (sewage) Generation are measurable for the city as a whole, it is not feasible to measure these indicators by industry sector for the same reason described above. Usage data by industry was obtained from the City for the following indicators: Water Use city -wide (Table 28,) Electricity Usage (Table 29), and Natural Gas Usage (Table 30). 43 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY + + SECTION [:THE CITY'S CURRENT STATE @QY VO(CG'. S \YOI \E'.g�6S CHAPTER 4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL LIST OF MODEL INDICATORS: The following indicators were selected based on the above criteria: Air • Greenhouse gas emissions: citywide Transportation • Average vehicle ridership Water • Water use: total citywide use • Water use: % imported Energy • Renewable energy use: % of all electricity use • Renewable energy use: Total energy use from clean distributed generation sources in Santa Monica. Waste • Diverted solid waste • Wastewater (sewage) generation Social Jobs - housing balance The following model shows each indicator's progress from the base year of 2000 towards the targets set for 2010. Each indicator begins with a value of 0% in the base year (2000), up to the target of 100% in 2010. Figures 5 and 6 illustrate the progress being made toward the 2010 targets. Tables 25 and M provide the normalized and actual data used to create the model. The following observations can be made either looking at either of the indicator models: the 2 -D line graph (Figure 5), orthe Rose Diagram (Figure 6): Greenhouse Gas Emissions City -wide: Because greenhouse gas emissions data is only available every 10 years, we will be able to assess the performance of this indicator at its next measurement in 2010. The 2010 target is for a reduction of 84 thousand tons of GHG's or 9.5% from 2000 levels. Average Vehicle Ridership: Average vehicle ridership reaches and surpasses the 2010 target in 2005, peaking at about 175 per cent of target in 2006. Water Use -total City -wide Use: Total citywide use continues to hover around the 2000 base year level. Much work remains to be done in order to reach 2010 targets. Water Use -% Imported: Percentage of locally obtained potable water decreases steadily until 2004, with a slight upswing in 2005 and 2006, but still remains below the 2000 base year level. Renewable Energy Use: Renewable energy use is at about 70% of its target in 2006 and is on a slight downward trend since data became available in 2005. Total energy use from clean distributed generation sources in Santa Monica: Total energy use from clean distributed generation sources in Santa Monica is at 10% of target in 2006 and is trending upwards towards the 2010 target. 44 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY �, SECTION I: THE CITY'S CURRENT STATE ectAlI VOi; -te strategies CHAPTER 4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL Diverted Solid Waste: Diverted solid waste increases toward the 2010 target until 2004, with an approximate decrease of 30% of its target value in 2006. If this trend reverses it may be possible to reach the 2010 target. Wastewater (sewage) Generation: Wastewater generation is on a continuous downward trend away from the 2010 target, decreasing even more rapidly starting in 2003. The current data trend makes it seem fairly unlikely to reach the 2010 target Jobs - Housing Balance: Jobs - Housing balance remains close to 2000 levels throughout, with a slight improvement in 2002, but then reverts to a downward trend. Much work remains to be done in orderto reach 2010 targets. Figure S. Resource Consumption and Pollution Generation Modei (Line Chart) 200+ P[ EeSS_4iloclicat 2CS_f[am..Z{lDA@osst neS z�tard 2010 Target 150Yu 100% i 50% 0% -IGO% I � -LSOM i -ID0� " 2090 Base Year —+—Greenhouse gas emissions, citywide "*—Average vehicle ridership '"r-' Water use: Total citywide use — Water use: Percent locally obtained or -- Renewable energy use Energy use from dean distributed generation sources in SPA —°'Diverted Solid Waste --Wastewater gene ration ° jobs /Housing balance 2010 Target 45 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE ectr VO1 -e -s rct teg[P_5 CHAPTER 4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL Figure 6: Resource Consumption and Pollution Generation Model (Rose Diagram) Progress of kndicatovs From 2000 Baseline toward 2010 Target _ Jobs;' Hous wastewater gsnembon Diverted Solid %,.a moray uca generation scuxes in 510 Cre enhouse gas emisauns: city,vide Ida ridershl{. Water use: total, cirrwide use c >r u_�: recsentiocaiky abtarncdp�tsblc —B+ —BASE C2200 l — �2T+71 3naz ia4 —26]6 —2A10 CTARCtri 46 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY y� SECTION I: THE CRYS CURRENT STATE �QYIi'sVOiCC StYQfieG���S CHAPTER4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL rable25: Normalized Data gm{ { lj A � �t{,,sJI ', "�"pt' IJ`'s {Yi '�a � `*' ``' 46 ��,.4" hJ i,U:�iY e J "v�k'�ml�g. c'z Y�� 't {,1 IT f4 �' I StL §NA ul�d. .. • T'^ �g a= Intl�catyors,. t,., ��u, �l„ ?;' yBASE�Y2001 ; "'4;;2002,�u�a,y�2003 .. ,S �'� > . „��,�;�„200j'�- . ,2005 �°"-�OQ6, 2`007 008 209 ERG �T +jay Greenhouse 1274 missions ity Wide +mt x �' `���`jsp$erag ehid Rie �e�'r6hip� <, . i • • �' • �' • o �' �>� Water UseTotal�CtyWldery ® ® ® ® ® ® ®_�_ ��'. IW pcWaterse ✓ Locally ObtamedPOtable �' • �' • �' Renewable Ene � e � � �' ,Ener Use FromLlean,Distribute � t�r��, t$ t �II{ Y� I:{ t� { �tl Trr� v�S�I IGenerationSourcesmSM �=`�sm �, ® ■ ■■■ ■ �, ® ■■e® ��. JI Diverted 5ohdWeste � � '� ICY. �' . � �' � ce �`,� Wastewater (sewage) Generafiont =°i jR 1 rR:�."'?� � •. � �' • � �' i}� ice¢% • t .t i ! �� ,��� Jobs HousmgBalance � ��,,�, � • • � �' STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION I: THE CIIYS CURRENT STATE CHAPTER4: RESOURCECONSUMPTION AND POLLUTION GENERATION MODEL 47 eccrti•+voice s1'ra�'egies Table26. Actua/Data :nuFrc• Sucfainahla CiN PrnPfPSG Rennrt 76. Delta!' refers to the difference in the indicators value from the value at base year to the target value in 2010 77 Calculated based on a linear trend towards the 2015 goal of 764,000 tons of GHGs. 78 assumption (to be confirmed) . 79 assumption (to be confirmed) STRATEGY FOR ASUSfAINABLE LOCAL ECONOMY SECTION is THE CITY'S CURRENT STATE CHAPTER 4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL 48 ear voice sfroet-,✓g7es Greenhouse Gas Emissions: Thousands of Air City -wide Tons 891 - - - - - - - 80677 84.57 Air Average Vehicle Ridership Ratio 1.39 1.39 1.38 1.39 1.40 1.45 1.59 - 1.50 0.11 Water Use: Total City -wide Millions of Water 13.4 12.80 13.40 13.30 13.60 13.00 13.40 - 10.7 2.68 Use Gallons /Day ater Use: % Locally Obtained Water % 19% 20% 14% 7% 5% 13% 12/ - 70% 0.51 Potable Energy Renewable Energy Use % 1 %78 - - - - 19% 18% - 25% 0.24 Energy From Clean Distributed 0y.7e _ - - _ 0.08% 0.10% _ 1% 0.01 Generation Sources InSM Waste Diverted Solid Waste % Diverted 55% 609/0 65% 66% 67% 62% - - 70% 0.15 . Waste Wastewater (Sewage) Millions of Waste 97 10.1 10.2 10.3 11.1 11.9 - - - 8.23 1.45 Generation Gallons /Day Social obs /Housing Balance Ratio 1.49 1.43 1.38 1.41. t 1.44 1 1.49 1.51 - 1.00 t 0.49 :nuFrc• Sucfainahla CiN PrnPfPSG Rennrt 76. Delta!' refers to the difference in the indicators value from the value at base year to the target value in 2010 77 Calculated based on a linear trend towards the 2015 goal of 764,000 tons of GHGs. 78 assumption (to be confirmed) . 79 assumption (to be confirmed) STRATEGY FOR ASUSfAINABLE LOCAL ECONOMY SECTION is THE CITY'S CURRENT STATE CHAPTER 4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL 48 ear voice sfroet-,✓g7es Table 27. Actual Data for Indicators without a Target �u1s...c 5... :.ztJivli I k � � r 1 r� 26 t. m`ti � i•. a a ..��c 'S �. 2- l.i.� )vim . � °us' � s� t,u`° t Y �,i ss Sohd Waste GeneratLOn Amount Land 'a Y F \�T t � r ,u } o � EnergyUse Total Gty wider �s ��, , �y §q � �, • � r � • � NumtierOfCongestedlntersecCTOns < }.� th �"da 7n �l Rfi t 7FF� r v!xsry k � �t ��Total,Uehlde NNIesTraveled Per Capita � �';{� �, Miles _ ® ® ® ® ®® t Urban RunoffRedudLOn Permeable Land ArealnTheCl i�•u 1 t k 4 rs �Y �u {s� fkr a rf �`��'�"..,��'® �c t -�� �'• BusRltlershLp %OfiResidentsWhoHaveRltlden BBBm ast �;r1tr r t YEar t �,� ,Bus Ridership l Of Readents Who Have Redden TdeShutt7e I r ,Bus Ridership Annual Ridership On IVITA Routes Ongmatmgll Ridership per Capita `�� �° Average Smgle Occupancy Vehide; In qM &PM Commute � i �t y� %O�Org mcPod chee�etlsS Ad At Local Farmer Marketsss�- - ® ® ® ® ®® i� +r, ot� yt'TW{ .,, h3F�`$stz��``�t� ,y} Ea m m' t /;0,.},f�ltSan.ty5a om.�c-ta Resrd3,enSts Voluntee�m t"b'e3.vyv... t .v u 1�i' Sf i` a. 2dL�ti3.« JP�e�w�itik ?~��ti4J"*)ia�si3k.^%°.t 1..« 49 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION I: THE CITWS CURRENT STATE eur':'�+ voice strategies CHAPTER4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL INDICATOR DATA BY INDUSTRY SECTOR Data by Industry sector for selected indicators, wherever data is measurable and available. Table 28: Water Use City -wide - Water Use 903,376. $591,059 153 10,061 90 164,188 $362,421 45 4,045 41 386,758 $1,072,514 36 9,483 41 RRS.J14 53.0R1.9D2 29 3.209 276 19,836 $248,588 8 2,964 7 12,732 $398,172 3 2,617 5 11,538 $558,185 2 3,012 4 26,096 $1,731,424 2 10,554 2 14AOR 54.810.469 0.3 2.657 - 6 Source: Water Usage: City of Santa Monica/ Total Sales: U.S. Bureau of the Census Table 28 illustrates that the Accommodation & Food Services sector is by far the largest user of water by sales volume, whereas the Retail Trade sector is the largest user per employee. The Other Services sector o, which includes photofinishing services, religious activities, dry cleaning and laundry services, personal care services, death care services, pet care services comprises is the second largest water user by sales volume, closely followed by the Health Care & Social Assistance and Retail Trade sectors. It may be useful to also look at the more detailed breakdown of water use by the categories used in city data. This is provided in Table 34 of Appendix I and shows that the City categories with the highest water usage are Hotels with Dining Facilities, Car Washes, Hospitals and Convalescent Homes and Hotels w/o Dining Facilities. 80 US Census Bureau. (2006). American Community Survey. Retrieved Dec 4, 2008, from hUp:IMw . census .gov /ecoNcensusO2 /nits /sector81 /81.htm STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE CHAPTER 4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL eCut- ice strategies s0 Table 29: Renewable Energy Use - Electricity Usage by Industry... xT xju. '7(Idustry- �mee�anrftmeoc oay.,agrea ue �r p_ a. r -- RQCetpts($�.,UQO) IKV1lH /,000 y,Num4e of pto ( h ����� 113,548,212 r „bales) F ees, r r Plog Accommadatton &Food Sen+tce�s Fealtheare85oSral� ;slstane,$1,072,514�� A�Itst�"'ntertaittmetttr &"rte.. Recre�atlon � F �;J Admrq Rai Esii�te &Rentals a �s� Re'tar Tt rode' i $3,081,902 Pofesstonal, 9ctence & Tech � � r r $1,731,424 r WhnesaleTrade s� � ®� r r �� Irformatlon Sources: Energy Use: City of Santa Monica 2006/ Sales by Sector: US Census 2002 Table 29 reveals that the highest user of electricity per sales volume is the Accommodation & Food Services sector. When measured by energy usage per employee, the top three sectors are closely tied: Arts, Entertainment & Recreation, Accommodation and Food Services, and Educational Services. Whereas the Arts, Entertainment & Recreation sector ranks 4`R in terms of energy use per sales volume, it is the highest user when measured by use per employee. Despite the relatively low overall use of electricity of the Educational Services sector, due to its low revenue figures and low number of employees, it ranks second for electricity use per sales volume. The third and fourth largest users of electricity by sales volume are Healthcare & Social Assistance and Arts, Entertainment and Recreation. Similarly to Table 29, Table 30 shows that the highest users of natural gas persales volume and per employee are once again the Accommodation & Food Services (largest user per sales volume), Educational Services, Healthcare & Social Assistance and Arts, Entertainment & Recreation sectors (largest user per employee). at For consistency with categories measured in the rest of this report, NAICS categories under 31 are not included here: Agriculture, Forestry, Fishing & Hunting: 11, Mining: 21, Construction:23 a Measurement discrepancy: The total Electricity usage in the report for FY 2005 -6 is approximately 700 Million kwn. However the Calendar Year report summarizing total electricity use for 2006 (another Edison source) is about 620 Million kWh. 51 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE e.QY” voiCx. s1"rcxf'egivs CHAPTER 4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL Table 30: Renewable Energy Use - Natural Gas Use by Industry Sources: Energy Use, City of Santa Monica 2006; Sales by Sector: US Census 2002 52 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SEC HON I: THE CITY'S CURRENT STATE PaQr'lnVOiCe StYGttCgiCS CHAPTER 4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL a er]r- [sAlx r �l rvSaaw)eqS( a o s. T o yawTE, 6a, oe, r AmI nsa ) ar¢ ` � .rf- us ffil � ica� erl fl�QM#O ee s mM lva "p Yeee epye m ` e TnodI a A ' Q tl � E „cattONa'LS_gsvAC' r®��� �eal hcarft ailall glstance "4°S� � � 4�� 8i .fie T .. - [et eatlpn :Qe ® ®® l Ut er, KWRTVNR Prsstonal;$5��gn�cg$4Tech� ® ®� r IrlPormaflar, � � "� � Sources: Energy Use, City of Santa Monica 2006; Sales by Sector: US Census 2002 52 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SEC HON I: THE CITY'S CURRENT STATE PaQr'lnVOiCe StYGttCgiCS CHAPTER 4: RESOURCE CONSUMPTION AND POLLUTION GENERATION MODEL a OBJECTIVES The purpose of this chapter is to put the information about Santa Monica from the preceding chapters into the context of its position within the Los Angeles region, and of Los Angeles' position in the global economy. METHODOLOGY Data in this chapter is taken from the previous chapters, internet sources, the City's LUCE Report, the City's Financial Report, the City's Economic and Demographic profile, reports of the Los Angeles Economic Development Commission (LAEDC), the City's Opportunities and Challenges Report and Richard Florida's book "The Rise of the Creative Class ". INTRODUCTION TO LOCALSUSTAINABILITY It is easy to define a sustainable local economy on an isolated island. Everybody stays on the island, working and enjoying a large part of the fruit of their labor; the remainder is invested in providing for a higher standard of living on the island in the future, including producing and training the next generation of island workers and ensuring that any damage done to the island environment is somehow made whole. It is much harderto define a sustainable local economy in the context of Santa Monica which is farfrom being an island. It is a very small part of one of the most important economic regions in the world; a region that faces increasingly strong competition from other regions in an increasingly globalized economy. In this context: • Economic sustainability depends on successful competition increasingly among regions all over the world rather than countries. • Each regional economy's success is highly dependent on national and global economic trends over which regional leaders typically have little or no control. • Santa Monica's economic performance has minimal impact on the performance of the regional economy, but regional economic performance can have a major impact on the sustainability of the Santa Monica economy. Santa Monica's economy is closely meshed with the rest of the region, supplying and receiving services to and from the rest of the region, and drawing more employees than it provides from the region's labor pool. • Residents move within the region and elsewhere according to the quality of life and other values they perceive in one area or another; similarly, companies move their locations around the region according to the economic value and potential they perceive in different areas. • The City of Santa Monica has limited or no controls over some its environmental characteristics, such as air quality or marine environment; many environmentally related services, such as water, sewer, storm sewer and energy are provided jointly with Los Angeles County or by a utility serving a far greater area than the city. The rest of this chapter considers elements of the sustainability of Santa Monica's local economy in the following two sections: • The Los Angeles Region in the world economy • Santa Monica in the regional economy: economic, demographic and environmental elements 53 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE edY-H�Vozce S-to teCjleS CHAPTERS: SEEKING SUSTAINABILITY WITHIN A REGIONAL ECONOMYAND A GLOBAUZEDWORLD THE LOS ANGELES REGION IN THE WORLD ECONOMY The five - county Greater Los Angeles region, with a total population of 17.8 million83, is one of the most powerful regional economies in the world. But, along with other North American regions with mature economies, it is growing more slowly than the fast charging city- regions of Asia. There are numerous rankings of cities by global importance, each one giving somewhat different results, and each with its own strengths and weakness. Three well known examples: A 2007 Price Waterhouse Coopers ranking of world cities by the size of their economies at equalized purchasing power (GDP at purchasing power parity) ranks Los Angeles as third in the world in 2005, but 134th of 151 cities in anticipated growth rate between 2005 and 2020.84 A MasterCard study measures the ranking of cities according to importance of their role in global commerce. Los Angeles ranked 4th in North America in 2008 and 17th among 75 global cities. Master Card had ranked Los Angeles 10th globally in 2007, but reduced its ranking because of the region's reduced role in financial services. In Mercer's rankings of 143 international cities according to cost of living, (the most expensive cities rank highest so it is preferable to have a low ranking). In 2008, Los Angeles ranked 55th, better than 42nd the previous year, thanks to the decline in relative value of the US dollar.85 From the perspective of export of goods and services, the key sectors of Los Angeles County's economy are: trade /transportation, tourism, film /TV and technology. In addition, the County is the largest manufacturing center in the U.S., and has a very strong higher and specialized education sector. The economies of the other four counties in the Las Angeles region are very similar to that of Los Angeles County, except that they lack Los Angeles County's strength in film /TV.as Two examples of global rankings more directly relevant to these key sectors are A World Knowledge Competitive Index that measures "knowledge capacity, capability and sustainability of each region and the extent to which this wealth is translated into economic value and transferred into the wealth of the citizens of the region" relates directly to the film, digital media and internet sectors, among others. In 2005, Los Angeles ranked 10th of 125 regions by this measure, up from 11th in 20048'. From a tourist perspective, the Euro monitor ranked LA 31st of 150 top tourist destinations in 2006, based on number of visitors.88 The same year, the Anholt City Brands Index, which measures how well known a city is in a global context, ranked Los Angeles 15th of 60 cities". Other rankings focus more on factors that are important for both the economy and the lifestyle of residents: 93 Los Angeles County Economic Development Corporation. (2007). LA Slats. Retrieved October 17, 2008 from www.laedc.org 84 Los Angeles County Economic Development Corporation. (2007). LA Slats. Retrieved October 17, 2008 from www.laedc.org; Ranks San Francisco, Seattle and Portland as 15 ", 23rd and 57 " in the world respectively. Retrieved October 17, 2008 from www.pwc.conVexhwb/pwcpublimtlons.nsf 85 Mercer LLC. (2008). Mercer's 2008 Cost of Living Highlights. Retrieved October 17, 2008, from www.mercer.com/costofliving 88 Los, Angeles County Economic Development Corporation. (2007). LA Slats. Retrieved October 17, 2008 from www.laedc.org, p. 3-6 87 Robert Huggins Associates. (2008). European Competitiveness Index 2006 -2007. Retrieved October 17, 2008, from www.hugghtsassociates.com. See also the Centre for International Competitiveness. Retrieved October 17, 2008 from www.eforic.com BB Euromonitor Intemational. (2008). Top 150 Destinations. Retrieved October 17, 2008, from www.euromonitor.com/Top_l 50_ Destinations; New York ranked 6th, San Francisco 37 ", Seattle 121" 89 The Anholt Brand Rankings. (2006). Retrieved October 17, 2008, from www. city- daia.00ni/forum/ general -u -s /130560 -60- world- cities- ranked- according- anhoithtml 54 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE P_CRAI' Voice sh-cittegies CHAPTERS: SEEKING SUSTAINABILITY WITHIN A REGIONAL ECONOMY AND A GLOBALIZED WORLD • Richard Florida's creativity index ranked Los Angeles 11`" of 49 US regions of over 1 million populations90. • Mercer's 2008 international ranking of cities according to quality of life has only 8 US cities in the top 50. Los Angeles does not make the cut, but San Francisco (29`"), Portland (48'h) and Seattle (501h) do91. In summary, the city of Santa Monica is a very small part of one of the most powerful economic regions in the world. The region's relatively high rankings in creativity, competitive knowledge and tourism reflect its positioning as "the entertainment capital of the world ", but the region's quality of life does not rank as highly as its economy. As the next section shows, the city of Santa Monica enjoys a more than proportional share of the sectors in which Los Angeles performs best in global markets. At the same time, the city also enjoys a strong reputation, as measured by its relative residential real estate prices, of being one of the more desirable parts of the region in which to live. In short, the city fully participates in the economic strength of the region, while enjoying a higher quality of life than many other parts of the region. SANTA MONICA IN THE CONTEXT OF Los ANGELEs REGION Economy While Santa Monica constitutes only about 1/50" of 1% of the area of the Greater LA region, and has about Y2 of 1% of the population of the five - county regions, it plays a significantly greater role in the regional economy than these numbers would suggest. Thanks to history, geography and decisions made by the City: • Santa Monica accounts for a little over 1% of regional employment • Median family incomes are over 60% higher than the county average, and average incomes per capita are more than double the county average92. • Average annual wages in Santa Monica are higher than LA County averages in all industries except the declining manufacturing sector93. The LUCE Report 94 notes four industry categories in which Santa Monica has a significantly greater concentration of employment than the region: visitor- serving (including hotels, restaurants, personal services) • retail • information and creative arts • professional Services (including real estate, financial) Visitor- serving Sector The visitor - serving sector, primarily the tourist industry, reflects Santa Monica's historic and present role as a beach town. It attracts over 5.5 million visitors annually, excluding day visitors from within Los Angeles 90 Florida, Richard. (2002). The Rise of the Creative Class. Basic Books. 91 Mercer LLC. (2008). Quality of Living. Retrieved October 17, 2008, from www.mercer.com/qualityofiving 92 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http: lhvww .shapethefuture2025.net/PDFAUW does, p,2.1-7 93 City of Santa Monica. (2005). Shape the Future— Opportunities and Challenges. Retrieved Oct 17, 2008, from hfp: /AAawv.shapethefuture2O25 .neUPDF /oc_report_web.pdf 94 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http:f Avww .shapethefuture2025.neVPDFAuw does, 2.1 -9 55 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE 6G1Y [►'�VOICe StYQtEg[e5 CHAPTERS: SEEKING SUSTAINABILITY WITHIN A REGIONAL ECONOMY ANDA GLOBALIZED WORLD County. Through the Transient Occupancy Tax (TOT) and sales taxes, it accounts for 15 -20 % ofthe City's General Fund revenues. The tourism sector accounts for over 10,000 employees, but average wages ($20,300 in 2004) were less than 40% of the average for all sectors in the city ($54,500)95. A high proportion of workers commute to Santa Monica, many some considerable distances. 96 In recent years, tourism growth has been strongest in the hotel guest segment, where visitors spend over $250 per day, about the same as in Maui. Santa Monica currently has over 3,400 hotel rooms, with occupancy rates of about 84 %, well above the County average and the rate seen as highly acceptable by the industry. In thi's respect, it has strongly outperformed the rest of the market in Los Angeles County over the last decade. There is relatively little variation in occupancy rates because the city has achieved the status of a year -round destination 97 The sector has a strong component of luxury accommodation, but one of its competitive advantages is its "unusually varied range of lodging options and pricing.98i The demand for additional rooms has been estimated at about 1,000 by 2013.99 LAECC forecasts that 2008 will be a good year for tourism in the county, thanks to the opening of major new attractions, plus the weakness of the U.S. dollar.10o Retail Sector The retail sector accounts for about 14 % of General Fund revenues, through retail sales taxes. The sector has grown strongly over the last decade —an average 5.9 % per annum over the 1996 -2007 periods. About one - third of Santa Monica's retail sales are related to non- residents, excluding day- visitors from the rest of LA County. Taking day visitors into account, probably half of all retail sales are to non - residents. 16' Estimates of "leakage" (i.e. sales to Santa Monica residents by retailers outside the city) suggest Santa Monica could expand its retail sales by about 10 %with more retail offerings to residents.'oz Retail trade accounted for over 9,600jobs in 2000; average wages were $28,900, about 53 % of the average wage for all industries. Only 40.8% of retail jobs in Santa Monica were held by city residents in 2000.103 Arts Sector Santa Monica has along and strong relationship with the arts. According to Americans for the Arts, about 15% of the Santa Monica workforce is employed in the creative industries compared to a national average of around 2 %. The creative industries sector has grown rapidly in recent years, particularly in software 05 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from http:/ hww .shapethefuture2025.neYPDF /oc— report— web.pdf. Average wages for this industry in Santa Monica were still over 20% higher than in the rest of LA County - 96 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from http:/ A• wwv. shapethefuture2025 .net/PDF /oc_report web.pdf; in 2000, on average about 52% of all Santa Monica jobs were held by City residents; in the arts, recreation, entertainment and accommodation sector, only 45.7% of jobs were held by City residents. If separate data was available for the hospitality sector alone, the number would be considerably less than 45% 97 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from http:/ Avw w. shapethefuture2025 .neUPDF /oc_report web.pdf 98 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from http:/ New .shapethefuture2025.neUPDF /0c report_web.pdf 99 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http:/Avww.shapetheftAure2025.net/PDFAuce—dots, Aure2025.net/PDFAuce—dots, looKyser, Sidhu, Martinez and Hynek for Los Angeles Economic Development Corporation. (2008). 2008 -2009 Economic Forecast& Industry Outlook. Retrieved October 17, 2008 from wwmlaedc.org, p.26 'ot City of Santa Monica. (2005). Shape the Future— Opportunities and Challenges. Retrieved Oct 17, 2008, from httpp:ZAvww.shapethefuture2025 .neUPDF /oc_ report — web.pdf 16 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http.,IA v .shapelhefulure2025.net/PDFAuce —does, p.2.1 -13 to -18 io3 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from http: /An .shapethefuture2025 .neUPDF /oc_ report web.pdf 56 STRATEGY FOR A5US rAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE epY VO�Ce SfYAt���6S CHAPTER 5: SEEKING SUSTAINABNTY WITHIN A REGIONAL ECONOMYAND A GLOBALIZED WORLD publishing, broadcast and telecommunications, and motion picture and sound recording.104 Major companies in these sectors have been attracted by the availability of campus office -style space, notably in the Special Office district. Average wages in the sector are around double the average for the city for those parts of the sector serving the global economy: $101,600 in the information sector and $117,400 in arts, entertainment and recreation .10' At the same time, the number of artists' live- work spaces and studios has been shrinking, and further shrinkage may occur, thanks to on -going increases in rents."' City residents strongly support the creative industries as part of the city's identity and the LUCE Report categorizes all creative industries as "local serving employment ", even though firms in the software publishing and film post - production sectors produce products to serve global markets. Professional Services Sector Santa Monica's strength in professional services is primarily related to services provided to the rest of the region, as well as to city residents and companies. More than many other sectors, firms in professional services are able to choose their locations according to their own preferences, rather than being constrained by other factors. The strong showing of these firms in Santa Monica speaks to the attractiveness of the city as a business location. Earnings in this sector exceed the city's average wage. At $157,600, the finance and insurance sector has the highest average wage of all sectors in the city, close to three times the city average, while professional and technical services average $75,900 and management of companies averages $70,900.107 Education and Health Sector One othersector in Santa Monica with a strong regional role is education and health services. Santa Monica College plays an important role within and beyond the city boundaries in education and many students at UCLA reside in the city, thanks to not only the attractive lifestyle, but also to the city's Big Blue Bus directly serving UCLA. In the health sector, the two major medical complexes of Santa Monica -UCLA Medical Center and Saint John's Health Center have service areas that extend well beyond the city's boundaries.10' Both complexes have expansion plans underway which will address the increased demand for locally available health services as the population of Santa Monica and the surrounding communities' ages in future years. Health, education and social services account for 14,400jobs in the city, but earnings are lowerthan the average: $34,900 in education and $41,600 in health care and social services. A fairly high proportion of jobs in these sectors, 59.6 %, are filled by city residents 109 104 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http: /A A .shapethefuture2025.net/PDFAuoe —does, 1p 2.1 -21 to -23 105 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from htttp: //www. shapet hefuture2025.netfPDF /oc_ report— web.pdf 18 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from hUp: /Aw .shapethefLdure2025,neVPDF /oc report_web.pdf. See also Santa Monica Daily Press, 29 July, 2007 10 City of Santa Monica. (2005). Shape the Future— Opportunities and Challenges. Retrieved Oct 17, 2008, from http: /Avww. shapethef uture2025 .net /PDF /oc_ report — web.pdf 1 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http: /M,unv.shapethefLdure2025 .neVPDF /luce_docs, p. 2.1 -25 - - 109 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from http: /MA ..shapethefLiture2O25 .neVPDF /0c— report — web.pdf 57 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY �yJ� SECTION I: THE CITY'S CURRENT STATE �QY{I�1/OICE' StYdtE'g�E'S CHAPTER S: SEEKING SUSTAINABILITY WITHIN A REGIONAL ECONOMY AND A GLOBAUZED WORLD The rest of the Santa Monica economy is accounted for by manufacturing and sectors that essentially support both residents and the main sectors of the economy: construction, wholesale trade, public administration and otherservices. Many of these sectors, particularly manufacturing, are playing a declining role in the Santa Monica economy as rising land costs force them to move to lower cost areas. Manufacturing employment fell 26.6% between 2001 and 2004. "o Economy and Land -use While much of Santa Monica's commercial space is concentrated in a few sectors,"' it is also diverse with regard to the geography it serves; two of its leading sectors, information /creative arts and tourism, serve global markets as well as local and regional ones. Similarly, the retail sector, and to a lesser extent the professional services and health sectors, serve local customers but also international tourists and customers from throughout the region. This is important not only because diversity is an important element of sustainability, but also because, generally speaking, the broaderthe geography served by a company within a sector, the higherthe wages tend to be. Growth pressures in the above sectors have led to increases in office rents throughout Westside Los Angeles County, but lease rates have typically been higher in Santa Monica than elsewhere. ""z One result of this has been concern that smaller businesses in the city may be forced out by rent increases, replacing authentically local businesses with local outlets of regional and national chain stores and thereby endangering the unique nature of the city that is a source of pride for its residents and a foundation of its appeal to tourists. A more positive result of the high demand for property in the city, from the perspective of City finances, has been an extraordinary increase in the property tax assessment roll. In nine years, (1997 -98 to 2006 -07), the gross assessed value of taxable property more than doubled, while the land portion of assessments increased 130 %.113. This growth is all the more impressive since the City has been charged from time to time, in both regional and national media, with being high cost and less than business friendly."' The ongoing tension, in Santa Monica and similar Westside communities, between demand for commercial property and community concerns to maintain a "beach" ambiance, with relatively low density development, is likely to continue indefinitely. The LUCE Report addresses this tension by supporting "local- serving office employment ", including health facilities, creative industries and professional, scientific and technical services, but not 'more traditional office -using industries such as financial services and real estate"."' The Report estimates that this approach would cut the estimated annual increase in Santa Monica jobs to about 269 per annum, rather than 385. The LUCE Report proposes to encourage the development of workforce housing in the city through density'bonusing', but does not estimate the average number of units likely to be developed as a result of its proposals. As a result, it is not possible to estimate the effect of the 110 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from htt : /A� . shapethefuture2025 .net/PDF /oc_repon web.pdf 11 City of Santa Monica. (2007). Economic & Demographic Profile. Retrieved October 17, 2008, from http wd : /Av .smgov.netfbusiness /demographics /iridex.btm 112 City of Santa Monica. (2005). Shape the Future —Opportunities and Challenges. Retrieved Oct 17, 2008, from hltp:/ Mww. shapethefutum2025 .net/PDF /oc_report_web.pdf; Los Angeles County Economic Development Corporation. (2007). LA Stats. Retrieved October 17, 2008 from wwww.laedo.org; (2008, July 24 -30). Santa Monica Minor. 113 City of Santa Monica. (2005). Greater Westside 2006 Economic Overview and Forecast. Retrieved October 17, 2008, from www.laedc.org. 114 Fine, Howard. (2007, July 2). Santa Monica's Dubious Honor: Bayside City Now County's Costliest for Business. Los Angeles Business Journal; Newman, Morris. (2003, January 8) Commercial Real Estate; RAND vs. Santa Monica: the New Headquarters. New York Times. 115 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http:// www .shapethefuture2O25.net/PDFAuce —dots, p. 2.1 -24 58 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE - �.Gt VO1Ce Stf Q����eS CHAPTER S: SEEKING SUSFAINABILITY WITHIN A REGIONAL ECONOMY AND A GLOBAU2ED WORLD LUCE recommendations on the city%s importantjobs to households' ratio. Unless an average of more than 180 new households are created annually, the increases in jobs estimated in the LUCE report will lead to a further increase in thejobs to households' ratio, moving the ratio further away from the City's goal of a reduced ratio. Demography Santa Monica's population has been relatively unchanged over the last two decades. Small decreases in population in the 1990s have been offset by increases in subsequent years. Relative to the rest of Los Angeles County, the Santa Monica population 116 • is more homogeneous, with 71.9% being non- Hispanic whites • is much more concentrated in one person households • has fewer families with children • is better educated • has higher incomes (though about 10% of the population has incomes below the poverty line) • has significantly higher workforce participation rates, and lower unemployment rates • has a high rate of self - employment (15 %, compared to 8.6% for the County) • is older (median age 39.3, compared to 32.0 for the County); 16% of the city's population is under 20 years compared to 30.9% for the County, while 14.4% of the city population is above 65 years, compared to 9.7% for the County The city population of about 88,000 lives in about 47,000 households. The proportion of renters is high — about 70 %, compared to 51 % for Los Angeles County and 33 % nation- wide.117 Of the 32,577 renter households reported in the 2006 census, 27,278 were subject to Santa Monica rent control in 2007. More than half of these units were rented at market value; about 400 controlled rent units fall vacant each year, thus qualifying for market rate rental. As units have moved from rent control to market value since 1999, their rents have increased from 50 to 100 %, reflecting the strong demand for housing in Santa Monica. House prices in Santa Monica are approximately double those in the rest of LA County"'. As house prices rose nation -wide over the first several years of the 21st century, Santa Monica prices outperformed those in the rest of the county; similarly, as prices have declined over the last year, declines have been less in Santa Monica than elsewhere.119 Another indicator of the attractiveness of the city is the number of self employed people who live there, since such people can chose their place of residence more freely than others. About 15 % of the Santa Monica workforce is self employed, compared to the Los Angeles County average of 8.6 % uo The number of people working from home in Santa Monica is rising steadily —from 8 % of the workforce in 2000 to an estimated 11% in 2006. This is significantly higher than the County average of 4 %(same as the US average)12'. As the cost of commuting increases, and as technology allows less expensive and more effective telecommuting and working from home, the share of the workforce working from is likely to continue to increase nation -wide. For cities like Santa Monica that are attractive to live in, the increase is likely to be 116 City of Santa Monica. (2005). Shape the Future — Opportunities and Challenges. Retrieved Oct 17, 2008, from http: /A wed. shapethef uture2025 .neUPDF]oc_report_web.pdf 11 US Census Bureau. (2006). American Facffnder. Retrieved October 17, 2008 from http: /tfactflnder.census.gov 118 US Census Bureau. (2006). American Factfinder. Retrieved October 17, 2008 from http: / /factfinder.census.gov 119 DataQuick Infonnatton Systems. (2006). California Home Safe Activity by City. Retrieved October 17, 2008, from WwW Iinem coMCharts /Annual- Charts /CA- City- ChartsOPCAR07.aspx c 1206 S Census Bureau. (2008). American Factfinder 2006 US Census. Retrieved October 17, 2008 from http: / /factfinder.census.gov 121 See Chapter 1 59 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY �� SECTION I: THE CITY'S CURRENT STATE eC•YyyIInivoice StYUtelg. ZeS CHAPTERS: SEEKING SUSTAINABILITY WITHIN A REGIONAL ECONOMY AND GLOBALIZED WORLD greater than elsewhere — not only will more Santa Monica workers work more often from home, but more entrepreneurs and others that are able to work at a distance from their fellow - workers will choose to move their residences to Santa Monica. A strong movement toward more working from home in Santa Monica will have a number of implications: • It will increase sustainability, and reduce traffic congestion by reducing daily commuting. • It will reduce City revenues per worker in the city because no property taxes on commercial property will be generated. On the other hand, workers who stay in the city all day are likely to spend more there than those who commute daily out of the city. • To the extent that workers from home are similar demographically to the current Santa Monica population, it will work against more diversity in the city. • To the extent that workers from home have a strong commitment to enterprises or other activities outside the Los Angeles region, or have occupations that require a great deal of travel, their commitment to the Santa Monica community and its uniqueness may be less than that of other residents. The attractiveness of Santa Monica as a place to live in the region has a number of implications for housing in the city, beyond high prices: • There is a tendency to make maximum use of the high priced land in the city, for example, by building the largest possible houses on city lots. • With strong demand for relatively low paying jobs in the city, high prices tend to encourage maximum use of rental properties, leading to overcrowding. There is some evidence of this, with multiple families sharing apartments in the Pico area, and families sharing their apartments with live -in au pairs in the North of Montana area12' . To the extent that overcrowding exists in the Pico area, this may be a contributing factor to gang violence in the area. As energy prices rise, Santa Monica is likely to become an increasingly desirable location relative to the rest of the County. Its coastal location requires less energy for cooling and heating buildings than inland parts of the County, while its location close to downtown Los Angeles and to LAX becomes increasingly attractive as the costs of commuting rise. Environmental Factors In considering the environmental impacts. of Santa Monica's economy, Chapter identified five broad categories of impacts and ways to measure them: • waste: diverted solid waste and wastewater generation • water: total city -wide use and % imported • energy: % of electricity from renewable sources and % from clean, distributed generation sources • air: city -wide green house gas emissions • transportation: average vehicle miles travelled by Santa Monica resident commuters Solid waste, water and sewer services are provided by the City of Santa Monica, which can influence both the price paid for services and the way services are provided. The City can also measure the amount of services provided. ?22 City Sustainability Staff, personal communication, 2008 60 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'SCURRENTSTATE 6GtY VOiCe. SYYUt�I�[ @S CHAPTERS: SEEKING SUSFAINABILITY WITHIN A REGIONAL ECONOMY AND GLOBAUZEDWORLD Energy in the city is provided primarily through electricity, provided by a private supplier, Southern California Edison Power. The City has minimal control over the way power is provided, but has an impact on price through its 10% utility tax payable by all energy suppliers in the city. This tax also gives the City some access to data on electricity usage. In many urban settings, energy use in buildings can account for up to 40 %of total energy use, but the mild California winters suggest a lower share in Los Angeles. In addition, energy usage in the city is low relative to areas further inland, because of the moderating effect of a seaside location on changes in temperature. Only about 15% of buildings, residential and commercial, have HVAC, whereas a far higher share of buildings further inland draw down energy to power these facilities. Transportation also accounts for about 40 % of total energy use in many cities; it also accounts for up to half of all CO2 emissions in places like Santa Monica123. The bulk of this is accounted for by private car usage, particularlyfor commuting. While Santa Monica prides itself on being a'walkable' community, and has made a very substantial investment in its Blue Bus service, traffic congestion is still the number one problem for many residents and employees in the city. Traffic problems in the city are as much — or perhaps more - a regional problem as a local one. As pointed out in the LUCE report124, the Westside of Los Angeles has "among the lowest number of freeway miles per capita of any major urban place in the country" and much of the congestion in the city originates in backups on Interstates 10 and 405. Because of rapid growth expected in the communities around Santa Monica that are served by these highways, congestion in the city is likely to increase from this factor alone, irrespective of any actions that the City maytake.125 Pressures maybe mitigated somewhat by the new Exposition light rail extension connecting Santa Monica to downtown LA with construction expected to begin 2010 -11, but major transit investments, by themselves, typically provide only short term relief from chronic congestion. While pressures outside the city have a major on -going effect on traffic in the city, developments within Santa Monica have also added to congestion. In particular: The growth of jobs in the city over the last decade, and the degree to which job growth has outstripped population growth, has resulted in a major increase in commuting from elsewhere in the region to jobs in the city. Nearly 74,000 people commuted into the city in 2000126; the number will have increased significantly since then, given the strong job creation in the city without minimal increases in resident work force In addition, while the population of the city has increased only modestly in the last decade, commuting from the city to jobs elsewhere in the region has also increased, from 64.5% of the resident workforce in 1980 to 67.8% by 2000.127 . These commuting patterns show clearly that Santa Monica's economy is increasingly linked to that of the rest of the region. 123 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http: /A�.shapethefuture2025.net/PDFAuce _ docs, 1p 2.3 -3 1 124 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http:/ Avvw. shapethefuture2025 .nettPDF /luce_docs, 1p 2.3-4 125 Santa Monica Land Use & Circulation Element. (2008). Retrieved October 17, 2008, http:/ Avg wv. shapethefuture2025 .net /PDFAuce_docs, p.2.3 -6,6 126 City of Santa Monica. (2007). Economic & Demographic Profile_ Retrieved October 17, 2008, from httrp: /Avww.smgov. net/ businessldemographicsfindex.htm 12 City of Santa Monica. (2007). Economic & Demographic Profile. Retrieved October 17, 2008, from http: /Annaw.smgov. net / business /demographicsfindex.htm 61 STRATEGY FOR ASUSMINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE earl�wirx si- rat'�gi>es CHAPTERS: SEEKING SUSTAINABILITY WITHIN A REGIONAL ECONOMYANDA GLOBAUZED WORLD While is extraordinarily difficult to make major changes in a regional transportation system from the eight square mile area that comprises the city, as pointed out in the LUCE report, the City does have a large number . of mechanisms at its disposal that, together, can make a significant difference. These mechanisms include: • land use policies that focus development around transit • locating new transit rail facilities where ridership can be maximized • mandatory transportation demand management (TCIM) measures for new developments and greater incentives for existing residents and employers • impact fees for transportation on new development • investments in new transit services • improving streets, sidewalks and the public realm to make bicycling and walking a more attractive alternative to the automobile • charging a greater share of the true cost of providing parking 62 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY ...r SECTION CTHECITY'S CURRENT STATE - ectr i'�VOi -e sf'rai"egies CHAPTER 5: SEEKING SUSTAINABILITY WITHIN A REGIONAL ECONOMY AND A GLOBALIZED WORLD The preceding chapters of this report have described the characteristics and sustainability policies of the City of Santa Monica, compared its sustainability efforts to other communities in California and the United States, modeled some of the key environmental implications of the city's economic base, and positioned the city in the regional and global contexts by which it is shaped. The purpose of this Chapter is to provide a high -level summary of these findings. Chapter 1 shows Santa Monica as a city where, simply put, people want to live and work. It has a scenic landscape with a fair climate, a charming "beach town" atmosphere complemented by attractive boulevards and a distinct neighborhood feel, a lively arts scene and a thriving economy. This chapter also draws out the issues Santa Monica faces in light of its enviable quality of life; namely, housing affordability, maintaining diversity in its residential population, traffic congestion and preserving the city's "beach town" character. Chapter 2 provides an overview of the City's policies that are geared towards local sustainability. A review is made of the Sustainable City Plan, its two updates and Implementation Plan, its linkages to the LUCE and the City's workshops on gang violence and vision for creative capital. These policies show the City's long history of incorporating sustainability into the fabric of the Citys visioning, planning and decision - making. Chapter 3 compares Santa Monica to five other sustainable cities in the U.S.: Pasadena, Santa Barbara, San Francisco, Portland and Seattle. This comparison —where the City performs soundly in its spending on sustainability, its economic diversity and waste management — clearly demonstrate the basis for its reputation as a sustainability leader. The comparison also point out areas where the City can improve such as affordable housing, air and water quality and utilization of public transit. Chapter 4 formulates a model establishing the relationship be the city's economic activities and its pollution generation and resource consumption. The model illustrates Santa Monica's progress to date as well as presenting a tool for monitoring its progress towards its 2010 goals outlined in the Sustainable City Progress Report. Chapter 5 outlines the regional and global forces that shape sustainability in Santa Monica's local economy. The chapter locates Santa Monica in one of the most powerful economic regions in the world and demonstrates the economic benefits it enjoys as a result. Santa Monica's advantages in terms of creative capital, a knowledge -based workforce and being a year -round tourism destination are balanced against high demands for housing and commercial space on the city's small land -base, regional pressures on its transportation network and the associated impacts on its local environment. Overall, our findings show a series of interrelated challenges to sustainability for Santa Monica's local economy. The city has achieved high employment growth over the last five years despite the relatively high costs it imposes on businesses due to its attractive location and the availability of land for redevelopment. The city still has significant amounts of transitional or otherwise developable land and the trends described above suggest the community will only become more attractive in future years relative to other commercial development locations in, the region. Employment growth has provided the City with revenue increases that give it a significant amount of fiscal flexibility relative to many other cities. To the extent this flexibility is used to provide additional amenities for city residents, this will make Santa Monica an even more appealing place to live and thereby increase housing prices further relative to other jurisdictions. This in turn will add to the revenues of the City as residential 63 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE eQYi� voice: StYQt+egt'v_s CHAPTER& SUMMARY OF FINDINGS- SECTION I assessments increase, but will further curtail the diversity of the city and result in more commuting to city jobs, and more traffic congestion as middle income earners are increasingly unable to afford local housing The City has a number of broad alternatives that can mitigate this sequence of events. One, discussed to a degree in the LUCE Report, is to concentrate more on provision of commercial accommodation that favors small local firms and arts incubation spaces. This would strengthen the community's unique identity and sense of itself as an arts community, but would likely provide less revenue for the City than focusing on attracting large corporations and institutions. It could slow the process of unique local businesses being forced to move by rising rents, and would have a more modest impact on increases in traffic than additional campus - style office parks. A second approach would be to give further emphasis to the sustainability of commercial buildings and businesses, by strengthening "green" requirements on new developments and by spending more to encourage existing businesses (and residents) to adopt more sustainable practices. Once again, there would be less funding available to provide amenities for residents, and less growth in employment in the city, at least in the short run. On the other hand, escalating the City s emphasis on sustainability would make it an increasingly desirable location for persons and companies with a strong commitment to sustainability, and a less desirable location for those indifferent to sustainability as a'locational' consideration. This in turn would make city residents in aggregate, over the longer term, more committed to further sustainability- driven policies at City Hall. A third approach, discussed in some detail in the LUCE Report, is an increased emphasis on provision of more workforce and affordable housing. This is a crucial element of a sustainable local economy, given that Santa Monica's two most important industries— tourism and retail —rely substantially on modestly paid workers, who have, forthe most part, to commute substantial distances to the city each day. A substantial increase in workforce and affordable housing would make a major difference to the sustainability of Santa Monica's economy. However, the degree to which the LUCE Report proposals will generate a significant quantity of such housing is, as yet, unknown. There are two strong impediments to production of major amounts of this type of housing: the very substantial costs involved per unit, and the community s concern that it retain its "beach town" ambience, which precludes major increases in housing density. The City of Santa Monica's approach to a locally sustainable economy will involve elements of each of the three approaches outlined above, as well as others. Each of the approaches implies tradeoffs among different elements of sustainability, so the challenge the communityfaces is to find that combination of policies that will provide the greatest progress along all different dimensions of sustainability, while preserving and enhancing the other unique features of the city that its citizens value most. The following two sections of this report, Section II and Section III, will define the key goals and targets of a sustainable local economy and devise a series of recommendations to build a "roadmap" to achieving these goals and targets 64 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION I: THE CITY'S CURRENT STATE ec.ri�%voice strategies CHAPTER& SUMMARY OF FINDINGS- SECTION I O N OF SANTA MONICA STRATEGY FORA SUSTAINABLE LOCAL ECONOMY SECTION 11: DESIRED OUTCOMES SECTION II: DESIRED OUTCOMES This is Section II of a three -part Strategy for a Sustainable Local Economy prepared for the City of Santa Monica. This section considers what a sustainable local economy in Santa Monica should look like. Describing such an economy began with stakeholder workshops to help set out what was desired, and achievable, in the city. This foundation was used to design a sustainable mix of business types and sectors consistent with the Sustainable City Plan (SCP), the LUCE and the regional and global trends affecting Santa Monica's local economy. A series of case studies from elsewhere in the U.S., plus an analysis of economic development indicators from the City's SCP, are used to recommend approaches for a strong, local and sustainable economy for Santa Monica. This report was compiled based on public data including publications, reports, media coverage and internet sites. While every effort has been made to confirm the validity of supplied facts and figures some inaccuracies may exist. Please report all such.corrections to info @earthvoice.ca. The data in this section is as was available at 2 February, 2009. 65 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY 6,C�Y VOiCH SfYA I��[eS SECTION 11: DESIRED OUTCOMES OBJECTIVES The purpose of this section is to present the findings from consultations held with Santa Monica's stakeholders on how to encourage a sustainable local economy. Community members were invited to a series of workshops to give their input on the study's main themes: how does Santa Monica attract and retain sustainable businesses, how does the City encourage existing businesses to green their operations and how can the city maximize re- investment in the local community by residents and businesses. METHODOLOGY Three workshops, each lasting two hours, were held in early October, 2008. The workshops consisted of a short presentation of our findings on the City's current sustainability. efforts as well as descriptions of the local economy. Representatives attended from the residential and business communities, the Chamber of Commerce and City staff. Most of the time in the workshops was spent discussing a series of questions about sustainability. The discussions around these topics were recorded and transcribed by ourteam and this feedback was developed into a number of themes. These themes are grouped under the relevant questions below, each with a discussion of stakeholder responses. WORKSHOP THEMES 1. What does sustainable business look like in Santa Monica today? Who are its sustainable leaders? Definitions of Sustainable Business Overall, participants felt a sustainable economy needed to be clearly defined in Santa Monica. Discussions around terminology showed the community held many different definitions of sustainability. Forexample,like many, most of Santa Monica equates green with sustainability. Like all business, the focus of a sustainable business is to operate in its own best economic interests. Current programs in place by the City (more on these programs below) focus on supporting green business. Green businesses were seen to have: an environmentally responsible product line (e.g. Greenopia Guide), and /or green operations with a low environmental impact and /or an expression of a green corporate vision. However, a sustainable business is one that goes beyond economic and green concerns; it also considers social matters (e.g. promoting healthy workspaces, including health care for its employees) and invests in community interests (e.g. donating to local causes, hiring locally). Local businesses were seen to be a fundamental building block of any sustainable local economic plan. Confirming a majortheme that came out of the LUCE consultations, community members expressed a preference for local business. Local businesses were seen to reinvest more in Santa Monica and naturally have shorter supply chains. Workshop participants categorized local businesses as those businesses whose owners live and work in Santa Monica, that contribute a public benefit to the city and that support local causes. For reference, the Sustainable City Plan defines local food as grown in the southern half of the state of California and local products and services as being produced within a 500 -mile radius of Santa Monica. The different understandings of green, sustainable and local business make defining them a key starting point in building a sustainable local economy. 66 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY - SECTIONII:DESIREDOUFCOMES eaervoice sf'rc�f¢gies CHAPTER 7: STAKEHOLDER CONSULTATIONS Examples of Green Business Examples of green businesses already operating in Santa Monica that were cited by community members are: • Groundwork Coffee o employs local people and local graphic artists for packaging o roast their beans on -site • Morley Builders • green building specialist • donates to over 100 community organizations and initiatives • known to be a good employer (e.g. health care plans) • The Water Garden Development • successful transportation demand management plan that reduced traffic by 509/0 • three businesses located there are Green Business Certified bythe City Whole Foods o conducted local hiring fair when setting up their Venice store o stocks local produce • Private school sector o has shown a lot of leadership in teaching students about their natural environment o offered scholarships that encourage diversity • Phelps Group • Creation Cafe • Homeopathic Pharmacy • Organic Farmer's Market 0 success storywith many local hotels and restaurants using the market Sheraton Delfina's Second Nature program o striving to be an industry leader by greening hotel operations beyond current industry standards • Business.com o implemented a very effective green buying program • Natural Resources Defense Council Leadership Leadership was seen as central to any successful move towards creating a sustainable economy in Santa Monica. The above section shows that there are a number of green businesses in the city. Promoting their successes and drawing out some of their leaders was seen to likely aid further sustainability efforts. The reputations of some international businesses position them as sustainability leaders (e.g. Red Bull, Whole Foods, MTV, Patagonia, and REI). Their strength was twofold. First, they have a reach beyond Santa Monica's borders. An example given was the Whole Foods campaign against eliminating plastic bags. The company's ability to lobby nationally brought change within the city, demonstrating a high degree of leadership and effectiveness on the issue. 67 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY �.f( SECTION II: DESIRED OUTCOMES ecir - %voiee s'trat'egies CHAPTER 7: STAKEHOLDER CONSULTATIONS The second leadership strength oftransnationaI businesses is the cultural cachet they wield. The branding of these companies has positioned them as cultural markers, attracting certain consumers. The "cool" factor of their brands enables them to set a tone that can be influential in shifting consumer preferences, whether towards green, sustainable or local businesses. Some organizations will have a position dedicated to sustainability, and these people would be a good starting point. A few members brought up the idea of making a working list of businesses that have a dedicated sustainability position to help connect those people. Overall, more outreach by the City to identify and promote sustainability leaders from the community would provide a rallying point for other such leaders. 2. How do we make businesses already in Santa Monica more sustainable? Existing Programs The City has not been idle; it has developed three programs for green and sustainable business. They are: • Sustainable Works Business Greening Program o fifteen businesses per year receive free consultations for integrating green practices into their operations • Green Business Certification o certification program established by the City, Chamber of Commerce, Convention & Visitors Bureau and Sustainable Works partnership for green businesses • Sustainable Quality Awards o recognizing and celebrating sustainable businesses operating in the city The programs are all viewed as a success. So much so that many suggested it was critical to expand funding and enlarge the scope of these programs. Further, the programs were considered to be a good foundation from which to launch any other sustainability programs. One hurdle the programs had to overcome was to better publicize their successes; they are not as well known as they could be. Extending outreach resources into the community would have two positive effects: it would inspire new businesses to participate and raise awareness of the City's sustainability program.. New Programs Workshop participants discussed building a new set of programs that target sustainability. The suggestions on how to move from programs with an environmental focus to ones that have a sustainability focus as well as how to improve the existing programs are covered below in a selection of participant responses: • introduce a sustainability certification program • ensure alignment of any new programs with the goals in the Sustainable City Plan, helping cooperation between City departments • introduce social sustainability components into the programs, e.g. incentives for: • hiring local staff and college students • paying a higher living wage • having high employee benefit standards • tie the City's green programs into the I Am Santa Monica" program • develop programs that focus on one issue (e.g. energy reduction, health care, product toxicity) targeting one type of business (e.g. restaurants, retail) • target most resource and pollution intensive industries 68 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES strQtefJ. ie-s CHAPTER 7: STAKEHOLDER CONSULTATIONS • educate other businesses by developing and distributing a simple green checklist that promotes the existing programs • develop a report card showing businesses where they don't meet program requirements • work with the Chamber to build a business case quantifying the benefits of green business to be used to promote to business owners; currently, there is little in the way of hard data that shows the benefits of going green • similarly, building case studies on the program successes as a promotional tool • e.g. since business X has gone through the Green Business Certification Program its energy costs have decreased by Y 3. What sustainable businesses would you like to see in Santa Monica? How can the City attract these types of businesses? Earlier discussions around the varying definitions of businesses arose again around the types of sustainable businesses preferred in Santa Monica. It was clear from community members that a diverse mix of business types and sizes were needed. The citys strength was seen to be in local and green businesses; sustainable businesses numbered a lot fewer. There were a number of ideas generated about how to attract sustainable business. Three of these, economic development, branding and workforce and policy development, are discussed below. Economic development Community members expressed a desire to see more business development geared towards sustainability. It was felt that this could be accomplished by either developing businesses from within or attracting them from without. There was also a renewed commitment to focus on economic development that supported environmental stewardship, similar to those programs already in place by the City. Santa Monica's reputation as a highly livable place has attracted many businesses. It is a mature economy whose continued success flows from its excellent quality of life. Part of this success has meant that the City's current economic development activities are not as aggressive as other cities in the region. A study128 comparing Santa Monica to Culver City showed how its reputation as a difficult place to do business was justified by the considerable difference in business start -up times. Culver City's six weeks was much more attractive to business than Santa Monica's eight to twelve month start -up period. Opportunities to attract sustainable business are also constrained by this reputation and reality. The city's Chamber and local businesses support more economic development as an opportunity to adopt development that targets green and sustainable business. A number of ways to facilitate this type of development were discussed: • A partnership between the City and the Chamber of Commerce to actively entice new, sustainable companies to Santa Monica. • Development of the city's own sustainable business infrastructure and adapting existing infrastructure to the needs of local business (e.g. arts at Bergamot Station, commercial space at the airport industrial park, etc). • Targeting internationally recognized leaders in sustainable business to locate in Santa Monica. • Develop a matching grants program aimed at sustainable local business practices. • Build a system of attractive bonuses for preferred projects. E.g. permits for extra building space, extra stories, and extra units. 126 Wong, S., Depaula, A. Devore, D. Rosengart, S. Scott, D. (2001). City Approval Process for New Businesses. 69 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES e-ctr O1C� StYPteg[6S CHAPTER 7: STAKEHOLDER CONSULTATIONS • Consider introducing a density bonus to support eco- industrial networking practices. • Provide development incentives for "green" office space and LEED certified buildings. Set a target for a certain number of fleets to run on alternative fuel vehicles. • Encourage the formation of clusters of sustainable businesses within business districts. E.g. a cluster of alternative vehicle dealers: Smart Car, Tesla, Zip, Toyota Prius. Branding One issue that was addressed at some length was the need for Santa Monica to have a branding strategy. Community members saw branding as an opportunity to raise its profile as a sustainable city in the eyes of not only residents but tourists as well. Portland was mentioned as a possible model, where its low -flow toilets and bio- diesel city fleets are a strong visual signal about the culture of sustainability that exists there. With this goal in mind, a good comm_ unication plan should be developed that consistently puts out the sustainability message to residents and businesses. As well, visual cues (e.g. window stickers, green lights, web presence) were needed as part of the promotion of the city's vision to visitors, residents and businesses. At present, there are many overlapping logos and certifications from local, national, international and industry groups. Many community members pointed out the overlap diluted the brands. Ideas to improve branding raised in the workshops were: • Unify the brands maybe Using a system akin to LEED where you have a bronze, silver, gold rating under the same logo. • Annual renewal of certifications and logos to keep legitimacy of the brand. • Organize certifications better. e.g. "logo bingo card" where the certifications are organized into a recognizable and coherent way. • City as the natural moderator for any credible branding program. The City is seen as a strong agent for sustainability in Santa Monica, and in particular the Office of Sustainability has been very effective in communicating their sustainability. messages. Promote participation and familiarity with some of the more well -known regional, national and international brand's. Bundling all programs so as to create a "gold" standard for sustainability. Workforce and Policy Development Certain investments to develop the local workforce and align the City's policies with a sustainable economy were also seen as important. A number of examples were raised. First, affordable and workforce housing were both identified as important parts of a sustainable Santa Monica. Earlier in this report, Table 7 and Figure 4 show incongruence between the ranges of housing choices in the city compared to the number of jobs. To address the gap between jobs and housing, community members supported City initiatives like Santa Monica's Redevelopment Agency, where there is a legal obligation to dedicate 20916 of its resources to affordable housing. Another idea that had some appeal was to invest in work -live housing. The Civic Centre development and 18`h Street Arts Centerwere both seen as good models for such housing developments. Community members also identified certain policies the City could develop or modify to accommodate sustainability. Following best practices for densification, promoting development around transit corridors and fast - tracking permitting for sustainable projects would lower obstacles to attracting sustainable businesses. Finally labor shortages were seen as a major drawback for employers to locate in Santa Monica and so developing policies for labor retention should be high prioritized. 70 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES Ce -s eg[eS CHAPTER 7: STAKEHOLDER CONSULTATIONS 4. How do we maximize reinvestment in the local economy? Innovation There is no optimal formula for maximizing reinvestment in a local economy. For Santa Monica to assume the leadership role it sees itself assuming, the City will need to look at innovative strategies to guide residents and businesses to invest locally. A few people raised the Green Zone established along the Los Angeles River as an example of innovation. For residency and office space in this coveted area, there is a stipulation for businesses to meet certain green requirements. Santa Monica should investigate this model. Similarly, a green business incubator was discussed and considered. Here, tax breaks and other opportunities to create a critical mass of starting and established businesses are brought together in one location. Chicago has the Green Business Exchange, a major green business incubator, that offers: collective health insurance • discounted administrative, legal and accounting services • business to business trade networks The cities of Pasadena, El Segundo and South Bay are currently reviewing similar models. Favorable terms for local business -to- business interactions were also encouraged by community members. One person raised the discounts for residents in places like Hawaii, an idea that could be used to develop a program of discounts for local businesses buying from each other. Similarly, local business loyalty cards would support local, and maybe even sustainable, business.. One example pointed out was the businesses on the P Street Promenade that have,a program where employees get a 15% discount for shopping at other Promenade businesses. Information and Networks A number of activities based on informing business and residents as well as building networks around the benefits of sustainable business were also discussed in the workshops. Some examples raised by participants were: • Assemble a sustainable business resource center that is a one stop shopping for local business and residents. • Promote the favorable green consumer base when recruiting new businesses. • Create a newsletter and /or email listsery as a forum to discuss the larger sustainability effort. • Develop mentorship programs from certified green businesses to those seeking certification. • Knowledge networks sharing best practices between industry associations. • The Chamber has Westside business expo every year, perhaps could build on its success; encourage more businesses to attend. • Bring key city groups together to develop a forum for attracting sustainable businesses. Improve the capacity of businesses to assist in local supply chain management. Most businesses aren't linked in to what others are doing in terms of resource inputs and waste outputs. Could also look at creating a buying networkfor services like health care, printing, etc. • Provide marketing materials in languages other than English. Cultural Shift Community members talked a lot about how a cultural shift was needed for sustainability to build momentum in Santa Monica. In many ways this was tied to the above discussions around branding strategies, information sharing and networks. Some points raised in the workshops around this shift to a sustainability culture were: 71 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY - ,.yaa� SECTION Ii: DESIRED OUTCOMES eQYII�VO.Ce SfYdtegieS CHAPTER 7: STAKEHOLDER CONSULTATIONS • Was there a tipping point after which sustainability starts to perpetuate itself? • Styrofoam ban was successful so explore at going further. E.g. banning plastic bags as San Francisco has done. • Linking to the City's branding strategy should'implement a public bike sharing program e.g. flashy blue and orange bikes. • Need to promote why sustainability should be attractive to business. • A cluster of green businesses in the Main Street BID are considering branding themselves as the "green light" district by installing green LED lights on surrounding street lights. CONCLUSION The stakeholder consultations provided a rich forum fortalking about where Santa Monica is and how it can move towards local sustainability. Discussions clustered around the practicalities of fostering sustainable development (branding, networks, policy and workforce development), alongside more abstract discussions about how to achieve sustainability (innovation, leadership, creative commons). The findings from these workshops are the starting point forthe analysis in the coming chapters of Section II of our report. Specifically, the most relevant findings from the workshops were: The need to define and communicate a better definition of local, green and sustainable business. Crediting the achievements of the three sustainability programs already underway as well as supporting further development of these programs. Endorsement of the themes developed in the LUCE, particularly neighborhood preservation and enhancement, development that encourages public benefits and factoring sustainability into City decisions. There was an added push for creative solutions to local sustainability and economic development when it comes to addressing these themes. Following from these key findings: Chapter 8 explores definitions of sustainability and Chapter 11 looks at how to measure progress towards it. Chapter 8 and 9 both look at how to expand existing sustainability programs and in what business sectors Santa Monica should focus these programs on. Chapter 10 reviews innovative strategies for local sustainability and economic development found across the United States. 72 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES ecarlvoice strategies CHAPTER7: STAKEHOLDER CONSULTATIONS OBJECTIVES The purpose of this chapter is to define a framework to assist Santa Monica in determining the optimum composition of its business sectorfrom the perspective of fostering a sustainable local economy. A number of guiding principles consistent with this framework are developed. They will be used in guiding the selection of strategies for developing a sustainable local economy (see Section III of this report) as well as the selection of indicators for measuring progress in doing so (see Chapter 11). The chapter is organized into four parts: regional and global trends that shape Santa Monica's economy economic and fiscal sustainability defining the local economy environmental and social sustainability METHODOLOGY The analysis in the chapter is based on the following: the Sustainable City Plan (SCP) and other City documents, the community issues and aspirations identified in Chapter 7 as well as the analysis provided in Section I of this report. REGIONAL AND GLOBAL TRENDS THAT SHAPE SANTA MONICA'S ECONOMY In determining an ideal mix of businesses for Santa Monica, it is important to start by considering global and regional trends. In a global context, manufacturing activities are increasingly moving off -shore to lower cost locations, notably in the Asia Pacific region. Notwithstanding the current unsettled economic times, and the emergence of modest numbers of new niche, high value manufacturing enterprises in the U.S., this long run trend is likely to continue and the US will increasingly become a service- oriented economy. Santa Monica constitutes less than one percent of a regional economy within which companies, workers, capital and goods are highly mobile. With its transportation advantages and its amenities, the city is a highly sought after location for businesses, resulting in a high cost of land for commercial purposes. Santa Monica's advantages relative to the rest of Los Angeles are unlikely to be eroded in the near future, and may actually increase with the development of rail -based transit linkages to the rest of the region. This means that commercial realty prices in the citywill remain higherthan in the rest of the region in the foreseeable future. As a result, it would be unrealistic forthe City to seek to attract the types of business that require a lot of real estate relative to the revenues they generate. Sectors that are land- intensive include manufacturing, wholesaling, construction, transportation, warehousing and utilities. Many companies in these sectors have been leaving Santa Monica in recent years, driven by lower costs elsewhere in the region and allowing the conversion of industrial lands to office -style uses for information /Internet and similar companies. Such businesses are highly unlikely to comeback to the city in any great number in future years. At the same time companies in these sectors will continue to have some, likely declining, presence in the community based on historic ties to the community, servicing the local customer base, and the city's attractiveness as an office location (offices may remain in the city even as production facilities relocate elsewhere.) A few new niche manufacturing facilities may also emerge in the city, based on the high tech expertise and /or craft skills of individual local entrepreneurs. Other sectors and subsectors can be excluded from the list of sectors that Santa Monica might seek to attract: 73 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES earivoic� strategies CHAPTER9: ANALYSIS OP BUSINESS TYPES AND SECTORS CONTRIBUTINGTOLONG- TERM SUSTAINABILITY • The Public Administration sector's'locational' decisions are based on political, not business, considerations. • The waste removal and remedial services subsector, and the rental and leasing subsector, each have relatively low incomes, while requiring significant amounts of land. • The Other Services sector, as well as the Administration subsector, consists of a group of small, very different businesses that have little in common. PRINCIPLE 1 Santa Monica focuses its business attraction activities on those sectors that generate high revenues relative to their use of land, including: • Information • Professional, Scientific and Technical Services • Accommodation and Food Services • Arts, Entertainment and Recreation • Health, Social and Education Services • Retail • Finance, Insurance, Real Estate As shown in the table below, almost all the sectors excluded have lower average wages than those of the city as a whole. Table 31: Average Wages by Sector, Santa Monica (2004) Sectors Recommended Information $101,587 Professional, Scientific & Tech $ 75,870 Accommodation, Food Arts, Entertainment, Recreation $20,343 $117,389 Health, Social Education $ 41,625 $ 34,945 Retail $ 28,$56 Financial & Insurance $157,648 Real Estate, Rental & Leasing $ 55,587 Sectors Excluded Construction $48,761 Manufacturing $34,341 Wholesale Trade $62,276 Transportation, Warehousing $40,506 Public Administration $38,491- 49,448* Administration & Waste Services $ 35,527 Other $27,426 AVERAGE WAGE ACROSS ALL SECTORS $54,496 129 No separate data exist for rental and leasing employment and wages 74 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY .al SECTION II: DESIRED OUTCOMES eprtlkvoiCe StYAt @gie2& CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TOLONG- TERM sus rXINABILITY Source: Opportunities and Challenges Report, p.4 -83 *depending on level of government Theta ble below summarizes employment information about the remaining sectors of the economy that could be considered in developing an ideal business mix for the city. Their share of total employment in Santa Monica, and of the employment of Santa Monica residents, exceeds 85 per cent. Table 32. Employment by Sector Source: Section 1 report. Chanter 1. Tables 10 and 12: LUCE Report o.21- 23' -2002 Economic Census ** - 2006 Census Note 1: The figures for employment in Santa Monica include only real estate, rental and leasing; financial and insurance are included in "Other". While the financlal /insurance sector may have been small in 2002, the 2006 EDD Labor Market report for 2007 identified 258 Finance & Insurance establishments in the city. Note 2: Those sectors for which no data are given for employment in the city are included in "Other' Note 3: Creative industries accounted for 11,464 employees in the city in 2006; these employees are included in the Information and Arts sectors - Note 4: The subtotal for Sectors to consider in an Ideal Business Mix includes an unknown number of city residents employed in Administration & Waste Services that should be included in the subtotal for Sectors Excluded n.a..: not available The seven sectors identified in Principle 1 can be considered from three perspectives: 75 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY yyrr SECTION II: DESIRED OUTCOMES ectrtf' voice_ 5tr¢teg[e5 CHAPTER 9: ANALYSIS OF BUSINESSTYPES AND SECTORS CONTRIBUTINGTO LONG- TERMSUSFAINABILITY Emcclum. .- EAME Sectors to Consider in an Ideal Business Mix Information (Note 3) 596 11 12,921 18 6,358 13 Professional, Scientific, Technical services 1,105 20 10,554 15 11,117 23 Accommodation, Food, Arts, Entertainment, 950 17 13,073 18 5,272 11 Recreation (Note 3) - Accommodation & Food 390 7 10,064 15 D.E. n.a. -Arts, entertainment & recreation 560 10 3,012 3 D.E. n.a. Health, Social and Education 863 16 10,622 15 9,062 19 Retail - 735 13 9,335 13 3,215 7 Financial, Insurance, Real Estate, Rental and 367 7 3,209 4 5,635 12 Leasing (Note 1) Subtotal (note 4) 4,616 84 59,714 83 40,659 85 Sectors excluded Construction (Note 2) 1,541 3 Manufacturing 111 2 2,617 4 1,983 4 Wholesale Trade 195 4 2,657 4 1,129 2 Transportation, Warehousing, Utilities (Note 2) 1,002 2 Public Administration (Note 2) 1,363 3 Administration & waste services - 201 4 2,964 4 n.a. D.E. Other (Notes 1 & 2) 406 7 4,045 6 1,190 2 Subtotal (note 4) 913 17 12,283 18 8,208 16 TOTAL - 5,529 1 1 71,997 1 1 48,867 Source: Section 1 report. Chanter 1. Tables 10 and 12: LUCE Report o.21- 23' -2002 Economic Census ** - 2006 Census Note 1: The figures for employment in Santa Monica include only real estate, rental and leasing; financial and insurance are included in "Other". While the financlal /insurance sector may have been small in 2002, the 2006 EDD Labor Market report for 2007 identified 258 Finance & Insurance establishments in the city. Note 2: Those sectors for which no data are given for employment in the city are included in "Other' Note 3: Creative industries accounted for 11,464 employees in the city in 2006; these employees are included in the Information and Arts sectors - Note 4: The subtotal for Sectors to consider in an Ideal Business Mix includes an unknown number of city residents employed in Administration & Waste Services that should be included in the subtotal for Sectors Excluded n.a..: not available The seven sectors identified in Principle 1 can be considered from three perspectives: 75 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY yyrr SECTION II: DESIRED OUTCOMES ectrtf' voice_ 5tr¢teg[e5 CHAPTER 9: ANALYSIS OF BUSINESSTYPES AND SECTORS CONTRIBUTINGTO LONG- TERMSUSFAINABILITY • the impact of different sectors on the overall sustainability of Santa Monica's economy, and on the fiscal capacity of the City itself • the role of local businesses • the impact of different sectors on the environmental and social sustainability of the community, as laid out in the SCP ECONOMIC AND FISCAL SUSTAINABILITY The current crisis in the global economic system demonstrates vividly the need for an economic development strategy that can be resilient and relatively stable in the face of major, unanticipated shocks. The keyto economic resilience and stability for a region or municipality is the same as for a business or a family, which is, to develop a diversity of revenue sources. In the context of a municipality, diversity of revenue sources means developing a business community with a diversity of: • sectors • markets • jobs at different income levels • large and small businesses As described in the Section I report Santa Monica currently enjoys a diverse economy, with a strong emphasis on sectors that do not require a substantial amount of real estate relative to the income they generate. The challenge forthe community is to ensure this diversity is maintained. The SCP recognizes the importance of diversity in its choice of economic development goals and indicators."o Of particular importance is to ensure the long term presence and vitality of those sectors that contribute most to the City s revenues. The City has a diversified revenue structure, with seven significant tax bases13' but is nevertheless dependent to a significant degree on the retail sales tax and the transient occupant tax, generated by the retail and tourism industries respectively. It is therefore particularly important from a fiscal perspective to ensure that the retail and tourist sectors remain strong and prosperous. PRINCIPLE2 High priority should be given to the retail and accommodation /food industries, because of their disproportional importance to the City's fiscal sustainability. The Citys LUCE Report... makes specific provisions for the development of many of the industries discussed above. It makes no explicit provisions for the industries that this report suggests should be excluded from consideration. In particular, the LUCE: • proposes Bergamot Transit Village, as well as other areas, be developed to encourage the creative arts • proposes a mid -town transit location that would facilitate the growth of healthcare services, as well as Santa Monica College • provides, expanded opportunities for workforce housing 130 City of Santa Monica. (2007). Sustainable City Progress Report. Retrieved October 17, 2008, from hUf: /Ary .smgov.nettlepd /scprindex.htm NB: first goal and first economic development indicator identified, p.13 13 See Chapter 1 of this Report, p.21 132 Santa Monica Land Use & Circulation Element. (2008). Chapter 2.1 Diversified and Sustainable Economy. Retrieved October 17, 2008, from http: /Aw . shapethe future2025.neUPDFAuce_docs, p. 2.3 -3 76 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES earlbvoice strategies CHAPTERS: ANALYSIS OF BUSINESSTYPES AND SECTORS CONTRIBUTINGTO LONG TERM SUSTAINABILITY • outlines specific areas for the expansion of the hospitality /tourism sector • envisions growth in retail around the redevelopment of Santa Monica Place, as well as along key boulevards and at light rail transit centers • proposes special considerations to accommodate more auto sales, through more intensive development and joint parking solutions • supports the redevelopment of cinemas in mixed use developments While the LUCE report fosters economic diversity in all these sectors, it is less supportive of financial and real estate offices that serve regional markets and require large floor plates. Responding to citizen concerns, the LUCE proposes to limit these companies to areas which are well served by transit, and to require proponents of new development for these sectors to provide significant community benefits, including affordable and workforce housing. This makes sense from a social sustainability perspective, but could weaken the city's economic resilience because the financial and insurance companies are of particular importance to the city's economic performance with average wages almost three times the city average. The LUCE report recommends significant advantages for those office services deemed "creative or local - serving", but does not require any sustainability- related standards be met in order to be deemed "creative or local serving ". PRINCIPLE 3 Amend the LUCE recommendations with regard to creative industries orlocalserving office uses to consider financial and insurance companies that serve regional markets as local serving and require all office uses classified as 'creative industries or local serving" to meet minimal sustainability standards. In the last six months, a number of major Santa Monica employers have left the city because of the difficulty their employees have in getting to work in Santa Monica. This underlines the increasing importance of workforce housing. The LUCE report makes some excellent recommendations to improve the supply of workforce housing, but these may not be sufficient to strengthen Santa Monica's economic resilience in the longer term. Of particular concern is workforce housing for the retail and tourist sectors, which are key to the city's economy and fiscal security, but which offer average wages that, for most employees, preclude living anywhere close to Santa Monica, let alone in the city itself. Without reasonably priced accommodation for those who earn lower incomes, there is a strong risk of labor shortages, increased congestion and loss of existing or new businesses. Economic diversity has a number of important elements beyond diversity of sectors. One key dimension is in the markets into which the products and services produced in the city are marketed. Geographic diversity of markets is important, because it maintains revenue flows from different regions of the world when other regions are suffering economic slowdown. For a small city situated in one of the most dynamic regions in the world, the most important markets to identify are: • the local market • the five - county regional Los Angeles market • global markets From this perspective, as noted in the Section I report, Santa Monica's businesses enjoy an enviable diversity of markets: 77 STRATEGY FOR A SUS TAINABLE LOCAL ECONOMY - SECTIONiI:DESIREDOUTCOMES @QY[f'�VO�C@. StYQt@g[G'S CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUSTAINABILITY • its information and tourist sectors are strong in global markets; they also represent sectors in which the entire Los Angeles region has a strong international "brand" • thanks to its history; beach and transportation assets, Santa Monica attracts a significant share of regional tourist spending • parts of its financial, professional services, health, education and retail sectors serve regional markets far beyond the city boundaries, thanks to the city's attractiveness as a business location Santa Monica's businesses also meet local needs, though, as noted in the LUCE report"' there is substantial "leakage" to surrounding municipalities, likely in excess of $200M per annum representing 9 %, of retail sales. Leakage of this sort is, to a degree, inevitable given the large amount of daily commuting into and out of the city. The direction in the LUCE report regarding the desirability of eliminating this leakage13. is important from the perspective of the economic resilience of the community. A possible next action would be to supplement the subsector analysis of the retail sector reported in the LUCE report with a similar analysis of the shopping habits of different income levels among Santa Monica residents and those who work in the city. This would give a clearer picture of opportunities to reduce leakage. Strategies to deal with leakage are dealt with in Chapter 13. ,Diversity of markets is important for reasons beyond resilience in the face of economic slowdown in any single market; in general terms, the larger and more global the market of a business, the greater its revenues and the greater its ability to pay higher salaries, and to buy higher quality products and supplies. The global dominance that Los Angeles companies enjoy in the film and special effects industries allows them to pay far _ higher wages than would otherwise be the case. Similarly, hotels and restaurants that enjoy a substantial international client base are typically able to offer better salaries than those whose clients are primarily local. More diversity of markets therefore implies more diversity of income levels of local employees. This is important, particularly for a tourist destination like Santa Monica, because a diversity of income levels makes a location more attractive by making the city itself more diverse. As well a range of income levels provides more opportunities for people of varying skills and abilities to find jobs and live in Santa Monica. As shown previously in Table 31, Santa Monica's various sectors provide a considerable diversity in average incomes. PRINCIPLE 4 To enhance economic sustainability, Santa Monica ensure its business attraction activities result in a mix of different sectors, and of different businesses within sectors, that serve a mixture of local, regional and global markets. Diversity in business size in a community is also important, because different sizes of firm have a different and in many ways complementary, advantages for a community. In particular, larger firms may have greater resources to: • pay higher wages, buy higher priced products, and pay higher taxes • provide value pricing that is particularly important for lower income groups (e.g. Wal -Mart) 133 Santa Monica Land Use & Circulation Element. (2008). Chapter 2.1 Diversified and Sustainable Economy- Retrieved October 17, 2008, from ht tp:/ Min^ w. shapethefuture2025 ,neUPDFAuce _docs, p 2.1 —15-17 134 Santa Monica Land Use & Circulation Element. (2008). Chapter 2.1 Diversified and Sustainable Economy. Retrieved October 17, 2008, from http: /Mn .shapetheUure2025.net/PDFfuce —does, p.2.1 —13 -19 78 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES eQrtvO.Ce Strcttegiem& CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUSTAINABILITY to experiment with, and adopt, green practices, particularly those that involve significant capital expenditures • to develop and implement corporate social responsibility (CSR) programs • mentor smaller firms • provide leadership to advance community goals On the other hand, smaller companies have their own advantages: • more attuned to the local population and needs • more interested in hiring locally (though with increasing global shortages of talent everywhere, and greater mobility of employees, big and small companies alike recruit talent from anywhere they can) • more flexible and quickto make decisions, because less constrained by bureaucracy, less formal • more interested in buying goods and services locally. This advantage may not be a major consideration in Santa Monica because: • the internet is increasingly allowing even small firms to purchase goods and services from distant suppliers on a cost effective basis • Santa Monica has a very small local economy, with limited offerings, particularly in goods • find it easier to make a major commitment to sustainability, and to monitor progress toward sustainability against plan • better positioned to capture niche, value -added markets for tourist retail or for local products and services • create opportunities for ownership and entrepreneurship, some based on being local suppliers to larger companies Thus, in many ways, small and large firms complement each other in the advantages they offer to a community. There may also be significant synergies between them, as when large companies provide mentoring to smaller companies or act as anchor tenants in new developments or lead community initiatives. Santa Monica is particularly fortunate that, as a small city, it has a combination of big and small firms, as shown in the table below. Table 33: Santa Monica Businesses Analyzed by Number of Employees , �` cNIA MbBMOtErY,lp)OyeeS fir= ,v�T.?f.�.'r„"�,NGmllgr„Ut N117)S.t20UZ),1y ._: • 1. Source: Santa Monica Economic & Demographic Profile, 2006, p. 22 PRINCIPLES Santa Monica work to: • Maintain its balance of large and small firms, and • Develop different policies to address businesses of different size, and to maximize synergy among businesses of different sizes 79 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II:DESIRED OUTCOMES earIvoice st'rat'egies CHAPTERS; ANALYSIS OF BUSINESS T YPESAND SECTORS CONTRIBUTING TO LONG- TERM SUSTAINABILITY In order to optimize its advantage in this area, the City could • nurture the growth of smaller companies • optimize the contribution of larger companies to community social and environmental goals • develop opportunities for large and smaller companies to work together to advance community goals Chapter 10 of this report will outline other communities experience in these areas; Section III will include recommendations in areas such as "local first" campaigns, business -to- business purchasing and cluster networks. DEFINING THE LOCAL ECONOMY The SCP's economic development goals specify an intention to foster the local economy."' In addition, the LUCE repo&" notes a strong community desire to strengthen local creative industries, a sentiment echoed in stakeholder input to this report .117 Developing policies to achieve these goals creates a number of challenges, not least those of defining the types of businesses that should be supported and of creating processes that provide fairness and equity in those supportive efforts. One definitional challenge is to define "local ". The SCP defines local food as food grown in the southern half of the state of California, and local products and services as those produced within a 500 -mile radius of Santa Monica. This approach reduces long distance transportation costs and pollution, but does not focus on the industries in Santa Monica. On the other hand, workshop participants quoted in Chapter 7 categorized local businesses as those "whose owners live and work in Santa Monica, that contribute a public benefit to the city and that support local causes ". This latter definition is based on not just geography, but also on behavior. A related challenge is defining a local company in a globalized world. Thanks to the recent miracle of excellent, low cost communication around the world, ownership of even small companies may be spread across several nations, goods may be produced in other nations and management may be located in a completely different location. Some of the relatively large number of self - employed entrepreneurs that reside in the city may be prime examples of the growing trend toward long distance ownership and management of companies.138 In its discussion of office development, the LUCE report addresses the definition of a "local" business from a different perspective. It argues that the creative industries, which include major internet companies as well as film and TV post - production facilities, can be viewed as "local- serving" in character because of "the large number of residents currently employed in the creative fields or interested in such activitieso13'. It should also be noted that the LUCE's definition of "creative industries" is far more restrictive than the definition of the "creative class" used by Richard Florida, which classifies about 30 per cent of the U.S. workforce as creative .140 135 City of Santa Monica. (2007). Sustainable City Progress Report. Retrieved October 17, 2008, from - hUp: /Aw .smgov.net(epd /Scprfndex.htm, p.13 13 Santa Monica Land Use & Circulation Element. (2008). Chapter 2.1 Diversified and Sustainable Economy. Retrieved October 17, 2008, from http: /AA . shapethefLdure2025 .neUPDF /luce_docs, pp 2.1 - 21 -24 137 See Chapter 7 pp.? 138 See Section 1 report, p. 49 139 Santa Monica Land Use .& Circulation Element. (2008). Chapter 2.1 Diversified and Sustainable Economy. Retrieved October 17, 2008, from hUp:/ Aw✓ w. shapethefutum2025 .net/PDFAuce _docs, pp 22 -23 140 Florida, Richard. (2002). The Rise of the Creative Class. Basic Books. p. 68 -74 80 STRATEGY FOR ASUS7AINABLE LOCAL ECONOMY SECTION II: DESIRED OLFFOOMES eC•Ytl�vO•Ce si"rc•tegle5 CHAPTER9: ANALYSIS OF BUSINESS TYPESAND5ECrORSCONTRIBUTINGTOLONG- TERM SUSTAINABILITY The definition of "local- serving' in the LUCE also explicitly excludes "office -using industries such as financial services and real estatei141, even though these industries serve primarily local and regional markets. These examples demonstrate the difficulty of developing clear definitions of concepts like "creative" and "local ". A more practical approach may be that taken by the LUCE with regard to office development, which simply defines those industries worthy of separate treatment because of their importance to the community. The businesses identified in the LUCE as "local- serving" include both small Santa Monica based self - employed artists and major international companies in motion picture, broadcasting and software industries. Each of these business types reflects the community's view of itself as an arts community. A similar approach may be appropriate with regard to other "local" industries. In that context, it is very important, to tourists and residents alike, that communities can clearly differentiate themselves visually from other communities. Maintaining a unique visual identity is becoming increasing difficult for communities as global and national retail chains with identical store layouts, signage and advertising come to dominate the main shopping centers of cities throughout the U.S., as well as other industrialized countries. Many communities seekto maintain their unique character by a combination of restricting the growth of national chains in their communities, and nurturing the development of local businesses that offer their own unique goods and services as well as their own unique 'look". Some of the local arts businesses identified in the LUCE already serve to help develop a unique Santa Monica "look", and a variation of the LUCE approach could usefully be extended to the retail sector. This could be a key element in strengthening two sectors — retail anc tourism —that are fundamental to the city's economic success. Having businesses that contribute public benefits to the community and support local causes is an important element of sustainability. But these businesses may have little to do with "local" in the geographic sense. In fact, global businesses can, and often do, contribute as much to a community as "local" businesses. This is partly because of their greater human and financial resources, and partly as a result of growing public expectations that major corporations will report regularly to customers, financiers and stockholders on their corporate social responsibility (CSR) achievements, not to mention their potential liability regarding environmental issues. Addressing how businesses contribute to their communities is covered in the following section. PRINCIPLE 6 Santa Monica consider as "local" businesses those types of businesses that. • Contribute to the city's sense of itself, particularly in the areas of arts /creativity and sustainability, and /or • Contribute to Santa Monica's uniqueness as a retail and tourist destination ENVIRONMENTAL AND SOCIAL SUSTAINABILITY The City of Santa Monica already has many programs that contribute to environmental and social sustainability, including: • zoning and permitting processes • regulation of solid waste, energy and water efficiency, water run -off • the voluntary and education programs of the Office of Sustainability and the Environment • housing and rent control programs t41 Santa Monica Land Use & Circulation Element. (2008). Chapter 2.1 Diversified and Sustainable Economy. Retrieved October 17, 2008, from http:/N mw. shapethefuture2025 .net/PDF4uce_docs, pp 2.1 - 24 81 STRATEGY FORA SUSTAINABLE LOCAL ECONOMY .�J SECTION II: DESIRED OUTCOMES eQYI I•VOiCe. StYGt6gt�5 CHAPTERS: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUSTAINABIUTY In addition, a number of the key goals outlined in the LUCE Report focus on improving environmental and social sustainability: • neighborhood preservation and enhancement • integrating land use and transportation to reduce peak hour vehicle trips by 50 per cent • providing for affordable and workforce housing • pro- active traffic congestion management As noted in the LUCE Report, Goal H2, and in Chapter.1 of this report, provision of workforce housing is a crucial element of a sustainable local economy. Santa Monica's two most important industries - tourism and retail - rely substantially on modestly paid workers who have, for the most part, to commute substantial distances to the city every day. The City itself has many workers that cannot afford to live in Santa Monica. The current recession may provide an opportunity to provide workforce housing as a lower cost than in previous years, but the costs involved will nevertheless be substantial. The LUCE Report (p.2.2 -9) provides a number of strategies to advance workforce housing. The City could show leadership in this area by beginning to explore options and opportunities to provide workforce housing for its own employees. This would provide useful information to initiate a discussion with the private sector on a broader workforce housing program. PRINCIPLE7 Santa Monica continue to examine options to increase workforce housing in the city Santa Monica has an excellent track record of working with the residential and business community on "green" issues through education and incentives. The stakeholder feedback sessions14. revealed a strong support for current programs and a desire to expand them. Further, respondents expressed a desire to move beyond "green" to "sustainable ". In this context: • A "green" business can be defined as a business that is committed to reducing its resource consumption, and pollution generation. • A "sustainable' business can be defined as business that works to reduce its resource consumption and pollution generation, and also works to provide a positive work environment and to improve the community in which it works. The City currently has two programs to encourage "green" businesses. The Sustainable Works Business Greening Program provides advice on integrating green practices into the processes and workplaces of 15 businesses per year. The Green Business Certification program, run in conjunction with the Chamber of Commerce, the Convention and Visitors Bureau and Sustainable Works, certifies businesses,143 based on their policies and practices in: purchasing, solid waste processes, including recycling, water efficiency, landscaping, energy efficiency, chemical use and pollution prevention and transportation. Given the strong support for the City's "green" programs, they should be strengthened and expanded. At the current time, advancing "green" business through continued education and modest incentives is preferred to a more regulation -based approach. Specific recommendations on greening businesses will be developed in Section 3. 142 See Chapter 7 143 Sustainable Works. (2008). Santa Monica Green Business Certification Program. Retrieved Nov 5, 2008 from website w,aw.smgbc.org 82 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY _ �./ SECTION II: DESIRED OUTCOMES - epr-0 %,o lee Strci te[g. [QS CHAPTER9: ANALYSIS OF BUSINESSTYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUSIAINABILITY A third City program, the Sustainable Quality Awards, encourages "sustainable" business practices. Run in partnership with the Chamber of Commerce, the program recognizes a limited number of Santa Monica businesses each year, based on144: • supporting the local economy through redevelopment, local hiring and purchasing, hiring of disadvantaged persons • systems for increasing efficiency of employees and operations • product and service innovation • charitable and community outreach efforts positive work environment with employee feedback and participation • family - friendly environment and work /life balance • programs to reduce waste, conserve resources and reduce use oftoxic substances • offering products or services that benefit the environment • efforts to protect or improve the quality of the urban environment • other practices that improve the community and the natural environment Many of the criteria that define a "sustainable" business, but are not part of the definition of a "green" business, are important to a community s sustainability. The stakeholder feedback calling for more emphasis on "sustainable" businesses, rather than on "green' businesses, makes a great deal of sense. The criteria used forthe Sustainable Quality Awards are a good starting point for considering "sustainability' criteria to use in determining which types of businesses Santa Monica should seek to attract. But they need to be reviewed and refined, to focus them more tightly on Santa Monica's sustainability needs. For example: • Some criteria appear to be normal business practice, rather than in any way exceptional (e.g. product innovation, increasing efficiency). • Given that Santa Monica's economy is, and will increasingly be, based on services not goods, it may be appropriate to focus more on green processes and services than on green products. • Given the City's wish to enhance its reputation for sustainability, more emphasis on national recognition for sustainability leadership may be appropriate. PRINCIPLES Santa Monica's business attraction activities take into account the resource consumption /pollution generation of sectors, as outlined in Chapter 4 of the Section 1 report but focus more on sustainability performance than on resource consumption /pollution generation. PRINCIPLE 9 The criteria currently used for the Sustainable Quality Awards be fine -tuned and focused to develop criteria for identifying firms to be targeted for relocation to Santa Monica. Most of the activities that are evaluated in the Sustainable Quality Awards are those that are increasingly reported upon by major corporations in their sustainability or corporate social responsibility (CSR) reports to the public. Most major corporations have strong, well established programs in this area. Section 3 of this t44 Santa Monica Chamber of Commerce. (2008). Sustainable Quality Award Nomination Form. Retrieved Nov 5, 2008, from www.smchambeccom 83 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY yyrr SECTION 11; DESIRED OUTCOMES @p tli vc> ce SfYi'+t @G�[@S CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- , TERM SUSTAINABILITY - report will consider CSR activities and trends that are most relevant to Santa Monica, including CSR activities of major corporations currently operating in the city. CONCLUSION Building and strengthening a sustainable local economy is a multi- faceted activity, involving: • promoting, through various mechanisms, diversity of sectors, of markets, of types of jobs and of businesses of different sizes • strengthening, growing and enhancing the City's existing green business programs • building on the City's experience of recognizing sustainable building practices, • drawing on the private sector's expertise in corporate social responsibility activities and reporting • programs to get businesses to work together more extensively and more effectively in areas such as local purchasing, and supply of education, health care and workforce housing services to employees Building on the LUCE process, this chapter provides a more detailed approach to local economic sustainability; Section III of this report will recommend specific programs that build on the principles in this chapter which are repeated for ease of reference in Table 34 below. 1 ame 34: Focus on attracting sectors that generate high revenues relative to their use of land, including: • Information -- • Professional, scientific and technical services 1 • Accommodation and food services • Arts, entertainment and recreation • Health, social and education services • Retail trade • Finance, insurance, real estate. Z Give high priority tothe retail and accommodation /food industries because of their disproportional importance to the Citys fiscal sustainability. Amend the LUCE recommendations with regard to creative industries or local serving 3 office uses to consider financial and insurance companies that serve regional markets as local serving and require all office uses classified as -"Creative industries or local serving' to meet minimal sustainability standards. 4 To enhance economic sustainability, attract businesses from a mix of different sectors, with diversity within sectors that serve mixture of local, regional and global markets. Work to maintain the city's balance of large and small firms, and develop different 5 policies to address businesses of different size, and to maximize synergy among businesses of different sizes. Consider "local- serving" businesses those types of businesses that contribute to the 6 city's sense of itself, particularly in the areas of arts /creativity and sustainability, and /or contribute to Santa Monica's uniqueness as a retail and tourist destination. I 7 I Continue to examine options to increase workforce housing in Santa Monica 84 STRATEGY FORA SUSTAINABLE LOCAL ECONOMY �.( SECTION 11: DESIRED OUTCOMES gp- mice st"raiegies CHAPTERS: ANALYSIS OF BUSINESS TYPESAND SECTORS CONTRIBUTING TO LONG- TERM SUSTAINABIUTY When targeting businesses for attraction, while taking into account the resource 8 consumption /pollution generation of sectors, focus more on sustainable processes and services rather than green products. 9 Fine tune and focus the criteria used for the Sustainable Quality Awards for identifying firms to be targeted for relocation to Santa Monica. - 85 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY yy�� SECTION Ii: DESIRED OUTCOMES eQYlrVO1Ce SfYQtegteS CHAPTERS: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUSTAINABILITY OBJECTIVES - - This chapter analyzes business types and sectors on the basis of how they align with, and contribute to, the longterm sustainability goals of Santa Monica. The chapter's aim is to provide insight into the advantages and disadvantages of selected business types and sectors from a sustainability perspective. METHODOLOGY Types and sectors are reviewed and further assessed according to the principles for guiding the preservation of Santa Monica's economic vitality developed in Chapter 8. A qualitative review of the economic, social and environmental implications of these sectors is made using secondary research with data from the U.S. Department of Energy, U.S. Census, City documents and online research papers. Continuing from previous sections the North American Industry Classification System (NAICS), which provides common industry names and definitions in the U.S., is again used to compare and review sectors 145. ECONOMIC SUSTAINABILITY PRINCIPLES Chapter 8 identified four principles that contribute to a strong fiscal position for Santa Monica, while continuing to support the City's environmental and social vision. These principles are: maintaining a diversity of employment, business revenues and city revenues; maintaining a strong retail sector; maintaining a strong tourism sector and attracting companies with high revenues per square foot. Table 35 below breaks down these principles into more specific focus areas examined throughout this chapter. 145 US Census Bureau. (2002) NA /CS - North American Classification System. Retrieved November 11, 2008, from http:/A&ww.censUs.gov/eosA� inalts/ 86 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY yy�� SECTION II: DESIRED OUTCOMES ec rtkvoice Strc teg4-eS CHAPTER9: ANALYSIS OF BUSINESS TYPESAND SECTORS CONTRIBUTING TO LONG- - TERM SUSTAINABILITY - Table 35: Guiding Principles for Economic Vitality in Santa Monica Source: Chapter 8 Businesses operating in Santa Monica pay a business license tax based on the gross receipts of the business. There are three majortax categories: professional ($5.00 for each $1,000 in gross receipts), services ($3.00 for each $1,000 in gross receipts), and other ($1.25 for each $1,000 in gross receipts). Certain small categories pay a flat fee 141. Unlike retail, services are not subject to sales tax. So they only provide direct income to the City 146 City of Santa Monica. (2008). City of Santa Monica 2008109 Adopted Budget. Retrieved November 11, 2008, from Internet address http.,IAvw Ol.smgov. nett financePoudgett2008- 09/ AdoptedBudgetl2008- 09AdopledBudget.pdf 87 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES epYli'�VOIC@ si"rut -�gies CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUS TAINABWTY Sectors Ensure an ideal mix and diversity of selected NAICS sectors. Ensure that city businesses serve Business Markets mix of markets (local, regional and Revenues global) Within each sector, have a diversity of business sizes, ranging from small Business Size entrepreneurs to global corporations. Ensure sectors provide hiring Income Levels opportunities for minimum wage to - Employment high income earners. Skills Ensure that locally available skills are aligned with selected NAICS sectors. Support strong retail sales and . Maintain diversity of: Retail Sales Tax reduce potential sales leakage. Retail can be cyclical and vary with regional incomes. Support the tourism sector. Tourism can be cyclical, varying with national Transient Occupancy Tax and international incomes and with the U.S. exchange rate City Revenues Ensure sufficient properties retain _ high property value — property Property Tax values are related to community ' appeal and the business cycle, but also have their own trajectory Support sectors that contribute to high business license tax— business Business License Tax license tax is only mildly related to business cycle Maintain a strong retail sector.. Support strong retail sales and reduce potential sales leakage. Maintain a strongtourism sector. Strengthen the Santa Monica brand and support the tourism sector. NAICS sectors selected in Chapter 8 Attract companies with high revenues per square foot. tend to have high revenues per square foot. Source: Chapter 8 Businesses operating in Santa Monica pay a business license tax based on the gross receipts of the business. There are three majortax categories: professional ($5.00 for each $1,000 in gross receipts), services ($3.00 for each $1,000 in gross receipts), and other ($1.25 for each $1,000 in gross receipts). Certain small categories pay a flat fee 141. Unlike retail, services are not subject to sales tax. So they only provide direct income to the City 146 City of Santa Monica. (2008). City of Santa Monica 2008109 Adopted Budget. Retrieved November 11, 2008, from Internet address http.,IAvw Ol.smgov. nett financePoudgett2008- 09/ AdoptedBudgetl2008- 09AdopledBudget.pdf 87 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES epYli'�VOIC@ si"rut -�gies CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUS TAINABWTY through business license and property taxed"'. Table 36 below lists the City's business license tax contributions by rate type for fiscal year 2008/09. Table 36. Fiscal 2008109 Business License Tax Contributions, City of Santa Monica MENEM= 110010 Service - 4,606 $9,215,401 40% $2,001 Professional 1,735 $5,640,132 25% $3,251 Retail 1,906 $2,996,580 13% $1,572 Agent /Broker 256 $1,140,687 5% $4,456 Corp /Admin Headquarters 197 $1,117,841 5% $5,674 Commercial Property Rental 1,096 $870,840 4% $795 Residential Property Rental - 2,587 $796,074 3% $308 Auto Dealer 45 $394,518 2% $8,767 Wholesale 209 $374,760 2% $1,793 Manufacturing 39 $118,743 1% $3,045 Utility Company 4 $117,648 1% $29,412 Contractor 284 $106,711 0% $376 Recreation /Entertainment 15 $35,174 0% $,2,345 Grand Totals: 12,979 $22,925,106 100% $1,766 Service, Professional and Retail contributed 78% of business license tax revenues in fiscal 2008/09. However per firm Utility Companies, Auto Dealer, Corporate Headquarter and Agent/ Broker provided the highest contributions. It is important to note that rate types shown above and utilized by the City for business tax purposes are not congruent with NAICS sector definitions. This information shows the categories that offer high revenue opportunities to the City. Due to differences in the way the data is aggregated by the Census Bureau and the City, it cannot be directly related to the NAIL categories; however, it does give an indication as to how different NAIC categories contribute to City tax revenues. Chapter 8 showed Santa Monica's long -term economic health depended on ensuring a diversity of business revenue sources, employment and City tax revenues. Encouraging numerous business sectors to operate in the city helps achieve this diversity. The analysis below shows a different picture because not all sectors provide the same level of economic benefits. Figure 7 compares selected sectors using five measures: revenues (from annual sales, receipts or shipments), business license tax contributions, employee income levels, water consumption and building energy use. The X -axis represents the total dollar value of sales, receipts or shipments from each sector operating within Santa Monica. These are revenues which generate tax revenues for the City. It is important to keep in mind that some dollar values make sense for profit businesses while others make sense for government agencies. For examples, high revenues from for - profit businesses bring in direct economic benefit to the city, while government agencies such as education, often generate low revenues but provide essential services to the city. The Y -axis represents average wage per employee by sector. The tone of the circle's coloring indicates 147 City of Santa Monica (2008). Economic and Demographic Profile: Business and Industry. Retrieved December 11, 2008, from Internet address hftp: //www.santa- monim.org /business /demographics /2006busind.htm 88 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY ��..rr SECTION II: DESIRED OUTCOMES ecti O%voice StrGtegieS CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTINGTO LONG- TERM SUSTAINABILITY total water usage by sales, receipts or shipments by sector (cubic ft /$1,000). A darker tone implies higher water usage. Sectors for which no data is available are white. The size of the circle is proportional to the average electrical and natural gas consumption by sales, receipts or shipments by sector (cubic ft /$1,000). A large circle implies a high energy user, and a small circle implies a low energy user. Finally, sectors showing a dollar ($) symbol provide the city with the highest business license tax contributions. Figure 7. Comparison of Revenues14' Wages and Building Energy Intensity in Santa Monica Q.1 HIS Q.2 .,�FIIarKe and lnwranre� - ArMEntertalnment, and Recreaticn _Wrafessbna45clennflG - ,dinformation- aci Technlcel6ervices$ Revenues' Revenues IOW HIGH Real Estate and Rcssmlard Imsing $ Heahh to reand Educa onal services - Social Assistance ,.,RetailTrade$ W oo mmodatbn d rood services $ Q.3 t�e Q. •Average incmie not avallable fromcenws3CSO2 data. Income based onthe City of sa ina Monlc"opponunmes and challenges Report,pd -ss �" Nonvenuedataavallable. Placement Is based onCemus2oo2 Publishing llldustiyrevenues(sub sectoq only Prolesslonswith income needed to afford 5anta Monica (MARR$61AOcoareabave Is ' 2o02 Cemus data by sector. Ref ectstotal sales receipts orshlpm ats by sector Exgead circle stm Is relative to electrical and natural gas consumption relatrce to sales, receipts or shipments by senor pow Eomomlccensu5 and Table 28 and 29). Larger circleimplses high uwmedium elide Implies medium use and small ante Implies lowum. it is assumed Information and Finance and insurance sectors havesimllarenergy usage patterns tothePralessionat Scientific and Technical services sector. $ sectors with high business Ilcfflwtax contributions fiscal 200VO4) eimiebom isrelatw towaterconwmptlon to sales, receipts or shipmentsby s mr MO2 ECbnoM IC Census} Olmplies hiuhwater user, O implies mediumwater user and - ImpllestowwateruserwhfieciMe S for sectors"ith no data available. 148 Revenues based on total sales, shipments or receipts by sector (excludes foreign subsidiaries) within the scope of the economic census, 2002. 89 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES ggYIISVOeCH SfYgt @gt6S CHAPTER 9: ANALYSIS OF BUSINESS TYPES ANDSECTORS CONTRIBUTING TO LONG- TERM SUSTAINABILITY Sectors in quadrants 2 and 4 provide the most direct economic benefit to Santa Monica because these sectors generate the highest revenues and in turn the highest business license tax contributions to the City; sectors in quadrants land 2 (above the X -axis) support Santa Monica's goal of a job to housing balance of 1 by paying an average wage above the Median Maximum Affordable Rents (MARS)149 Sectors below the X -axis are those paying incomes below Santa Monica's MARS. Strictly from an economic and housing affordability perspective, quadrant 2 is the most desirable and quadrant 3 is the least desirable. However, the diagram shows 40% of the sectors fall in quadrant 1. Nevertheless all of these sectors are important because they align with the four guiding principles, thereby either directly or indirectly contributing to economic benefits for the city. Each sector in Figure 7 is examined more closely below. The retail sector is one of the City's largest sources of tax revenue, contributing through both business license tax and sales tax revenues. In fiscal 2008/09 this sector contributed 15% of business license tax revenues to the City. However, retail also has one of the lowest wages, negatively impacting Santa Monica's job-housing balance. On the positive side, buildings in this sector tend to consume less energy and water than those from other sectors with the exception of grocery stores which tend to be high energy users due to refrigeration needs. Overall this sector's tax contributions and low building energy footprint are attractive traits, but its low wages conflict with the City's affordable housing goals. There are a total of 12 sub - sectors in retail. Four are reviewed below based on their alignment with the guiding principles. 1. Motor vehicle and autoparts dealers made up only 7% of Santa Monica's retailers, yet generated the highest revenues (54% of all retail revenues) and second highest business license tax contributions per establishment ($8,800 per establishment). With an average annual salary of $70,000 this sub -sector paid the highest average annual wages and was the second largest employer in retail. However, overdependence on this sub - sector's employment and revenue contributions has some risks including the need for large retail space where land is scarce and costly, sensitivity to economic conditions and the potential output of hazardous materials from repair and maintenance activities which can impact the health of employees and the community. 2. Clothing and clothing accessories stores represent 28% of all retailers. The sub -sector had the second highest revenues (9% of all retail revenues) in addition to the largest number of establishments and most employees in the sector. The number of clothing stores are more than double that of every other retail sub -sector and had a diversity of business size and types. 3. Food and beverage storeswere third in terms of revenues, number of retail stores and employees. However, these establishments tend to have a higher footprint in terms of energy and water consumption than the retail sector as a whole. 4. Non -Store retailers, such as electronic media and door -to -door sales represent 7% of all retailers and generated 5% of retail revenues. With an average of less than one employee per establishment, this sector likely has many self - employed or home office workers. 149 MARS for Santa Monica is $61,400 for a 0- bedroom apartment in Santa Monica 149 (see chapter 1 for a discussion of MARS in Santa Monica) 90 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY y� SECTION R: DESIRED OUTCOMES - eGr0%voiCe strategies CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUSTAINABILnY The accommodation and food services sector not only has low revenues and low wages, but also has the highest water and energy consumption out of all sectors. However, these negative traits are counter - balanced by this sector's support of the city's strong fiscal position by contributing to a diverse economic base and maintaining a strong tourism sector. Hotel guests to the city accounted for $407.3 million (49 %) of total annual visitor spending in the city compared to other overnight guests who spent $136.8 (16 %) million, and day visitors who spent $297.6 million (35%)150 The greatest visitor spending in 2004 was toward the shopping /gifts category with $242.9 million spent, followed by meals out, $196.1 million, lodging $188.4 million, and beverages $80.6 million. Retail and transient occupancy tax contributes between 25 and 30% of General Fund Revenues to the City"' The city's Professional category, which contributed 25% of business license tax revenue, is comparable to NAICS' Professional, Scientific, and Technical Services sector. The professional category pays the highest business tax base ($5.00 for each $1,000 in gross receipts). The NAICS Professional, Scientific and Technical Services sector generates the second highest sales, receipts or shipment revenue in the city. In the coming year the highest rates of growth are forecast for the professional and service categories' 52. This sector supports a strong job-housing balance by paying high wages. Combined 2002 revenues of $1.7 billion generated from over 1,100 establishments reflect the sector's diversity of services, markets, and business size and employee skills' 13. The educational services and health care and social assistance sector has low wages, yet thejobs it provides support the livability and well -being of Santa Monica. Helped in part by the activities of this sector, Santa Monica has a quality of life that attracts businesses and residents to the city. Jobs in this sector thereby indirectly contribute to business license and property tax revenues. The arts, entertainment and recreation sector helps to support a healthy job housing balance despite comparatively modest revenues. The 2002 US Census recorded just over 10,000 paid employees in this sector earning a combined annual payroll of $305 million. As shown in Table 37 below, the highest annual payroll earnings were for independent artists, writers and performers who earned an average annual salary of $143,000. This sub - sector also employed 70% of workers forthe whole sector. The livability and character of the city is bolstered by the tax revenues brought in by visitors, tourists and residents alike. The sector also has a diversity of establishments, as can be seen in Table 37. Table V. Arts, Entertainment, and Recreation Sub - sector Breakdown 54 150 City of Santa Monica (2008). Economic and Demographic Profile: Business and Industry. Retrieved December 11, 2008, from hftp:lAvm.santa- monim.org/ business /demographics /2006busind.htm 151 City of Santa Monica (2008) 2008 -2009 Adopted Budget. Retrieved December 5, 2008, from hUp: /hwwe9l .smgov.netffinance/ budget / 2008- 09/ AdoptedBudget/2008- 09AdoptedBudgetpdf 15 City if Santa Monica. (2008). City of Santa Monica 2008109 Adopted Budget. Retrieved November 11, 2008, from - htt�: /MnrwoOl .smgov. net / finance@ udget / 2008- 09/ Ado ptedBudget/200 8- OgAdoptedBudget.pdf 15 US Census Bureau. - (2002). Summary Statistics by 2002 NAICS. Santa Monica City, CA. Retrieved November 11, 2008, from htl�: /Aww. census. gov /ecordcensusO2 /data/caf70000.HTM 15 US Census Bureau. (2002). Arts, Entertainment and Recreation - Santa Monica City, CA. Retrieved November 11, 2008, from hftp:iAw . census. gov /ewNcensusO2 /data /ca(70000_71.HTM 91 STRATEGY FOR A susTA1NABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES gpY[►'woice sfirai -egies CHAPTER9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTINGTO LONG- TERM SUSTAINABILITY ait {�'d: - rLiq ITT :3 Performing Arts Companies 50 NA NA (100 -249) Promoters of Performing Arts, Sports, & Similar - Events 13 NA NA .(100 -249) 150 City of Santa Monica (2008). Economic and Demographic Profile: Business and Industry. Retrieved December 11, 2008, from hftp:lAvm.santa- monim.org/ business /demographics /2006busind.htm 151 City of Santa Monica (2008) 2008 -2009 Adopted Budget. Retrieved December 5, 2008, from hUp: /hwwe9l .smgov.netffinance/ budget / 2008- 09/ AdoptedBudget/2008- 09AdoptedBudgetpdf 15 City if Santa Monica. (2008). City of Santa Monica 2008109 Adopted Budget. Retrieved November 11, 2008, from - htt�: /MnrwoOl .smgov. net / finance@ udget / 2008- 09/ Ado ptedBudget/200 8- OgAdoptedBudget.pdf 15 US Census Bureau. - (2002). Summary Statistics by 2002 NAICS. Santa Monica City, CA. Retrieved November 11, 2008, from htl�: /Aww. census. gov /ecordcensusO2 /data/caf70000.HTM 15 US Census Bureau. (2002). Arts, Entertainment and Recreation - Santa Monica City, CA. Retrieved November 11, 2008, from hftp:iAw . census. gov /ewNcensusO2 /data /ca(70000_71.HTM 91 STRATEGY FOR A susTA1NABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES gpY[►'woice sfirai -egies CHAPTER9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTINGTO LONG- TERM SUSTAINABILITY The information sector generates high revenues and pays wages above Santa Monica's MARS. This sector is an important source of tax revenue for the City and contributes to its job- housing balance goal of 1. Motion picture and sound recording are a key sub - sector representing 92% of establishments in this sector with average wages of $65,000, just above Santa Monica's MARS. Publishing industries (except the Internet sub - sector) were also important in terms of employees and establishments and generated revenues of $1 billion (2002), with average wages of $89,000, well above Santa Monica's MARS. The finance and insurance sector is engaged in financial transactions involving the creation, liquidation, or change in ownership of financial assets or in facilitating financial transactions. Census data forthis sector is only available at the state level; however, based on the Opportunities and Challenges paper, this sector provides wages above Santa Monica's MARS. Wells Fargo Foothill and Wilshire Associates Inc. were among Santa Monica's top employers in fiscal 2007/08, each with over 200 employees, Agent /Broker, Commercial Property Rental and Residential Property Rental (includes hotels and motels) is best reflected underthe NAICS category, Real Estate and Rental Leasing Establishments (which does not include hotel and motels). This NAICS sector pays wages slightly below Santa Monica's MARS, generates modest revenues, but contributed 12% of business license tax revenues to the City (fiscal 2008/09). This sector is important to the city since it serves property buyers and sellers who contribute to property transfer tax revenues. This sector also services local and global markets of property owners and buyers, and an active local market of renters. SOCIAL AND ENVIRONMENTAL IMPACT This section reviews social and environmental implications for businesses and business sectors in relation to themes developed in Chapter 2 and Chapter 7 of this report. Energy As shown in Figure 7, buildings from the retail and educational services sectors have low levels of energy use. Buildings from the accommodation and food services, as well as the health care and social assistance sectors, consume the most energy of all sectors. Reducing energy consumption from these sectors will have the greatest impact on the city's total energy consumption and GHG emissions. New expertise and technologies are making aggressive targets for reducing building energy use increasingly possible and affordable. Big Box Stores "' Currently there is an estimated sales leakage of over $200 million peryearfrom retail sales being made outside of Santa Monica. This is concentrated within the General Merchandise / Department Store and 155 Average pay total excludes Performing Arts Companies and Promoters of Performing Arts, Sports, & Similar Events 156 Total employees excludes Performing Arts Companies and Promoters of Performing Arts, Sports, & Similar Events 15' A big box store . is a large format, high volume retail store like Wal -Mart, Costco, Best Buy or Target. 92 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY ��.rr SECTION Ii: DESIRED OUTCOMES �,�e. - i' vOiee Stirs teg(eS CHAPTERS: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUSTAINABIUTY Agents /managers for Artists, Athletes, & Other Public Figures 51 57,188 76,400 290 Independent Artists, Writers & Performers 394 429,962 142,900 1,798 Museums, Historical Sites, & Similar Institutions 9 3,536 21,600 77 Amusement, Gambling, & Recreation Industries 39 . 29,532 17,200 493 Other 4 NA NA NA Arts, Entertainment, & Recreation Total - 560 558,185 $97,000••• 2,658 156 The information sector generates high revenues and pays wages above Santa Monica's MARS. This sector is an important source of tax revenue for the City and contributes to its job- housing balance goal of 1. Motion picture and sound recording are a key sub - sector representing 92% of establishments in this sector with average wages of $65,000, just above Santa Monica's MARS. Publishing industries (except the Internet sub - sector) were also important in terms of employees and establishments and generated revenues of $1 billion (2002), with average wages of $89,000, well above Santa Monica's MARS. The finance and insurance sector is engaged in financial transactions involving the creation, liquidation, or change in ownership of financial assets or in facilitating financial transactions. Census data forthis sector is only available at the state level; however, based on the Opportunities and Challenges paper, this sector provides wages above Santa Monica's MARS. Wells Fargo Foothill and Wilshire Associates Inc. were among Santa Monica's top employers in fiscal 2007/08, each with over 200 employees, Agent /Broker, Commercial Property Rental and Residential Property Rental (includes hotels and motels) is best reflected underthe NAICS category, Real Estate and Rental Leasing Establishments (which does not include hotel and motels). This NAICS sector pays wages slightly below Santa Monica's MARS, generates modest revenues, but contributed 12% of business license tax revenues to the City (fiscal 2008/09). This sector is important to the city since it serves property buyers and sellers who contribute to property transfer tax revenues. This sector also services local and global markets of property owners and buyers, and an active local market of renters. SOCIAL AND ENVIRONMENTAL IMPACT This section reviews social and environmental implications for businesses and business sectors in relation to themes developed in Chapter 2 and Chapter 7 of this report. Energy As shown in Figure 7, buildings from the retail and educational services sectors have low levels of energy use. Buildings from the accommodation and food services, as well as the health care and social assistance sectors, consume the most energy of all sectors. Reducing energy consumption from these sectors will have the greatest impact on the city's total energy consumption and GHG emissions. New expertise and technologies are making aggressive targets for reducing building energy use increasingly possible and affordable. Big Box Stores "' Currently there is an estimated sales leakage of over $200 million peryearfrom retail sales being made outside of Santa Monica. This is concentrated within the General Merchandise / Department Store and 155 Average pay total excludes Performing Arts Companies and Promoters of Performing Arts, Sports, & Similar Events 156 Total employees excludes Performing Arts Companies and Promoters of Performing Arts, Sports, & Similar Events 15' A big box store . is a large format, high volume retail store like Wal -Mart, Costco, Best Buy or Target. 92 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY ��.rr SECTION Ii: DESIRED OUTCOMES �,�e. - i' vOiee Stirs teg(eS CHAPTERS: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TO LONG- TERM SUSTAINABIUTY Drugstore sub - sectors. These sub - sectors achieved only 28% and 37% respectively of estimated total potential retail sales to residents in 2007158. This leakage is likely the result of two factors: Santa Monica residents who work and shop outside the city and residents going outside the city to shop at big box stores. The latter not only has negative financial implications for the City, but also contributes to commuting congestion and pollution.15s,1so Large retailers can have a greater impact and reach on environmental and social practices throughout the supply chain as well as on consumer preferences. In 2008, the only principal employer in the retail sector with over 100 employees was Whole Foods 181. This implies an underrepresentation of larger retailers and a low diversity of local markets served in this sector. Whole Foods is an exemplary retailer, engaged in sustainable purchasing practices, offering local products, conducting local hiring fairs and participating in its community. However, it offers high priced, premium products which are out of reach for most medium and low income earners. With the closest Wal -Mart located only 11 miles away, it is likely that many residents and employees leave Santa Monica to purchase more affordable products, contributing to sales leakage. The reason for shopping in big boxes is clear when compared to major supermarkets, Wal -Mart food prices were found to be 8% to 27% lowert6'. In addition, when Wal -Mart enters new markets, one study found that competitors also reduce prices, which benefits low- income families"' However, Wal- Mart's impact on price reductions can have negative social implications because its lower prices often result in lower wages not only in Wal -Mart, but also on surrounding retailers. For example, it was found that Wal -Mart store openings lead to lower average retail wages in a county by between 0.5% and 0.9% and lowerjob based health coverage by 1 %16'. A Wal -Mart store operating in Santa Monica could negatively impact Santa Monica's job- housing balance because retail wages that are already below MARS could be further reduced. It is well established that big box stores can negatively impact local retail wages, independent businesses and future retail diversity. It is critical for Santa Monica to understand the impact of big box stores on: reduction in leakage figures for the city, tax revenues accruing from big -box stores to the City, local independent businesses and future retail diversity and whether big -box stores actually benefit low income populations. Santa Monica would benefit from a study which identifies where resident and non - resident employees shop and whether big box stores will significantly lower the level of retail leakage from Santa Monica. Tourism Tourism can have both good and bad environmental effects. The economic benefits from tourism, particularly the sector's contribution to the retail and occupancy transient tax base, are well known in Santa Monica. This economic importance alone helps to ensure an element of environmental stewardship aimed at protecting the city's parks, local beaches and shoreline. Nonetheless, tourism solely concerned with economic benefits 158 City of Santa Monica. (2008). LUCE: Diversified and Sustainable Economy, chapter 2 1, p 17. Retrieved November 11, 2008, from htt$:/ ANWW. shapethefuture2025. n,et/PDFAuce_docs /LUCE_Chapter_2,pdf 15 In addition, the leakage of sales in these two sub - sectors likely exceeds $200 million since this is a net figure which does not consider additional resident sales leakages that are offset by Los Angeles County residents visiting, shopping and buying in Santa Monica 160 City of Santa Monica. (2008). LUCE: Diversified and Sustainable Economy, chapter 2. 1, p 16. Retrieved November 11, 2008, from bttp: //w iw,shapethef iture2O26 .neUPDF /luce_docs /LUCE_Chapter 2.pdf 16 City of Santa Monica. (2208). Economic and Demographic Profile. Retrieved November, 11, 2008, from http:/Awvw.santa- monica.org/ business /demographics[2006busind.htm 162 Jacobs, Ken. (2007). Living Wage Policies and Wal -Mart. Retrieved November 11, 2008, from httlp: /Aw w.socialpolicy.orgfindex.php ?id =2701 16 Dube, Eidlin and Leter. (2007). Firm Entry and Wages: Impact of Wal -Mart Growth on EarningsThroughout the Retail Sector. Retrieved November 11, 2008, from http: // repositories .edlib.org /cgilviewcontent.egi ?article= 1124 &context =iir 164 bid 93 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES @QY�VOiC@ St t@g[e5 CHAPTER9: ANALYSIS OF BUSINESS TYPESAND SECTORS CONTRIBUTING TO LONG TERM SUSTAINABILITY - has a strong negative impact on the natural environment, using considerable resources and contributing to road congestion, pollution, excessive solid and liquid waste generation and energy consumption. Maintaining a strong tourism sector is one of this chapters guiding principles. Essential to safeguarding the sector will be continued vigilance from the City and a high level of stewardship from industry to manage tourism's negative environmental impacts. If the city is to brand itself as sustainable, a sustainable brand should be evident to visitors throughout the city, from clean beaches to sustainable business operations. One way to do this is the opportunity for an ecotourism cluster within Santa Monica, building on the success of the Pacific Wheel on the Santa Monica Pier, the world's first -ever solar - powered Ferris wheel'65 Commuting Reducing traffic congestion and air pollution from commuting is a pressing challenge for Santa Monica. Two strong drivers of commuting are that the number of jobs based in Santa Monica exceed the resident population, and that 44% of paid employees earn incomes below the MARS levels. Many low wage earners opt for transit, and so it will be important to continue to provide clean and affordable transit options. Inbound commuting could be directly reduced by increasing the supply of affordable and workforce housing in the city. Outbound commuting could be further reduced by increasing the number of high paying jobs in the city. Supply Chain "For consumer goods makers, high tech players and other manufacturers, between 40 and 60% of a company's carbon footprint reside upstream in its supply chain —from raw materials, transport and packaging to the energy consumed in manufacturing processes. For retailers, the figure can be 80 %. nee Shortening the supply chain by buying local is the simplest way to control upstream production impacts. However, in today's global economythe majority of retail products in Santa Monica have travelled great distances to get to the shelves. Greening the supply chain is difficult for many retailers in Santa Monica because of their relatively small size and purchasing power. Chain stores differ in that they have more purchasing influence over their suppliers yet this is offset by their slower pace of change and the City's difficulty in exerting any influence over them. Establishing a purchasing collective between retailers and Santa Monica's educational institutions could provide some opportunities for greening the supply chain. As well, eco and fair trade labeling, pushed by consumer demand, is improving credibility and also helping to green the supply chain. Internal Processes Santa Monica's sectors tend to have a high number of employees per square foot. So, minor internal changes in processes and values can be quickly multiplied to have positive environmental and social impacts. For example, hiring or purchasing from local companies is one way for organizations to reinvest in Santa Monica and reduce the impact of transporting goods and people. Creating a sustainability purchasing policy, encouraging equipment and lights to be turned off at the end of the day, double -sided printing and public transit programs are some easy processes that can be implemented. Retail Chains When retail chains and local shops compete for commercial space, chains are normally able to pay higher lease rates, thereby increasing property value and property taxes. Retail chains began opening outlets in Santa Monica's Third Street Promenade in the 1990s. Today, international retail chains able to pay higher rents have 165 Roaming Times. (No Date). California offers ecotourism programs year- round. Retrieved December 2, 2008, from httte: /AvNw.roamingtimes.conVa/traveYc lifomia- ecotoudsm.asp is Robinson and Stranberg. (2008). Sustainability Purchasing Trends and Drivers. Reldeved November 17, 2008, from http: /A.wwAl. smgov .neticityclerk /counciVagendas/ 2003 /20030909/s2003090907- E- 1.hlnJ http : /A�.buysmartbe.conVUserF!Ies /File /SPN- IC- SustainabilityPurchasingTmndsUpdatedPaperAugO8 .pdf _ 94 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES gpYS l�voiee strategies CHAPTER 9: ANALYSIS OF BUSINESS TYPESAND SECTORS CONTRIBUTINGTO LONG - TERM SUSTAINABIUTY almost eliminated locally owned retailers' 87. One study found that spending $100 at independent businesses creates $68 in additional local economic activity, while spending $100 at a chain produces only $43 worth of local impact 168. From a social perspective, retail and restaurant chains can lead to the loss of community character and identity which can have negative implications for the city s branding and tourism appeal. The important contribution of local, independently owned businesses to the local economy is explored in greater detail in Chapter 10. Chapter 8 reviews the advantages of mixing small and large companies in Santa Monica and Chapter 10 reviews the benefits associated with locally owned firms. CONCLUSION This chapter has reviewed selected business sectors and types in terms of their economic, social and environmental contributions. Table 38 provides a snapshot of each sector's impact, opportunity or contributions by looking at some of the key items reviewed in the chapter. Column 1: Low Energy Consumption- sectors that have buildings with lower energy use. Attracting these lower energy users to Santa Monica will result in a smaller overall environmental footprint for the city. Improving building efficiencies in sectors with high building energy use (i.e. those not selected in the table) will offer the greatest opportunity to reduce the current commercial energy demand. Column 2: Local Serving - sectors identified by the LUCE as local- serving or recommended in Chapter 8 to be also considered as local- serving. Column 3: Wages above MARS - sectors that pay wages that allow employees to afford Santa Monica's high cost of housing. Column 4: Top Revenues — selects the City's top 6 revenue generators. The tax base from these sectors, particularly from professional services, is important to the economic health of Santa Monica Column 5: Support Tourism Sector- highlights 3 sectors which are key to attracting visitors to Santa Monica. Sectors that support tourism are particularly attractive because tourism contributes to retail spending at local businesses as well as retail and transient accommodation tax revenues forthe City. 167 City of Santa Monica. (2003). Ordinance. Retrieved November 11, 2008, from ht tg:/ X01. smgov .neVcityclerk /counciUagendas/ 2003 /20030909/s2o03090907- E -1.htm 16 Civic Economics. (2004). The Andersonville Study of Retail Economics. Retrieved November 11, 2008, from http: /An . civiceconomics ,condAndersonville/ 95 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY ..��..rr SECTION II: DESIRED OUTCOMES @QYi►�VO�C6 StYQf @g(QS CHAPTER9: ANALYSIS OF BUSINESS TYPESAND SECTORS CONTRIBUTING TOLONG- TERM SUSTAINABILITY Table 38: Impact, Opportunity or Contribution bvSector The table above shows that the most attractive sectors in terms of their financial, environmental and local serving impact are: • professional, scientific and technical • arts, entertainment and recreation • finance and insurance • information • retail trade The selected sectors are consistent with the principles developed in Chapter 8 and provide a diversity of revenue sources, business sizes, markets wages and skills. As a whole, these five sectors offer advantages that contribute most to achieving long -term sustainability in Santa Monica. It is recommended that strategies developed for attracting and retaining sustainable businesses concentrate on businesses within these sectors. 769 Santa Monica Land Use & Circulation Element. (2008). Chapter 2.1 Diversified and Sustainable Economy. Retrieved March 28, 2009, from http:/ AmNw. shapethefLdure2025 .net/PDFAuce _docs, p. 2.3 -24 176 Sales shipments and receipts in 2002 171 Consultant team recommends that Finance and Insurance be considered as local- serving. 96 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY ..tea1r SECTION II: DESIRED OUTCOMES @QY�I•VOICe strafiegies CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TOLONG- TERM SUSFAINABILFFY - a� L'LrxT 7rYC, Professional, Scientific, & Technical V V V V Services Arts, Entertainment, & Recreation V V V Finance & Insurance V V171 V Information V V - V V Real Estate & Rental & Leasing V V Educational Services V Retail Trade V V V Health Care & Social Assistance V V Accommodation & Food Services V V The table above shows that the most attractive sectors in terms of their financial, environmental and local serving impact are: • professional, scientific and technical • arts, entertainment and recreation • finance and insurance • information • retail trade The selected sectors are consistent with the principles developed in Chapter 8 and provide a diversity of revenue sources, business sizes, markets wages and skills. As a whole, these five sectors offer advantages that contribute most to achieving long -term sustainability in Santa Monica. It is recommended that strategies developed for attracting and retaining sustainable businesses concentrate on businesses within these sectors. 769 Santa Monica Land Use & Circulation Element. (2008). Chapter 2.1 Diversified and Sustainable Economy. Retrieved March 28, 2009, from http:/ AmNw. shapethefLdure2025 .net/PDFAuce _docs, p. 2.3 -24 176 Sales shipments and receipts in 2002 171 Consultant team recommends that Finance and Insurance be considered as local- serving. 96 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY ..tea1r SECTION II: DESIRED OUTCOMES @QY�I•VOICe strafiegies CHAPTER 9: ANALYSIS OF BUSINESS TYPES AND SECTORS CONTRIBUTING TOLONG- TERM SUSFAINABILFFY - OBJECTIVES The purpose of this chapter is to help define local business' and 'local economy' in the effort to create both a sustainable and local economy for Santa Monica. The economic development benefits of local business and the history of the U.S. local business movement are outlined, as are numerous examples of best practices from around the country. Further, it describes a new model of economic development, which focuses effort in areas where support is needed for local businesses to thrive. The chapter concludes with a review of best practices for local governments to focus their economic development, to grow local business and to support the health of their local economy. Methodology This chapter reviewed both primary and secondary information sources as well as the many local business support programs at the state, county, city and grassroots level were assessed for relevance. Primary research sources consisted of: • conference proceedings from the BALLE 2008 Annual Conference (Boston) • participation on a BALLE network leaders national "round -up" call on public policy • interviews with local business networks interviews with local economic development experts Secondary research sources consisted of: • extensive internet research • the book Small -Mart Revolution by Michael Shuman . the book The Big -Box Swindle by Stacey Mitchell DEFINING LOCAL As members in a growing number of local business networks across North America are discovering, local is a contentious concept. A rising tide created by the popularity of farmers markets, the 100 -mile diet and anti -big box campaigns, coupled with rising energy prices and recall after recall of overseas goods, has many individuals, businesses and governments seeking goods and services closer to home. In 2007, the word "locovore" even moved into standard lexicon, as the Oxford Dictionary coined it word of the year for those who seek out local goods and services, especially local food. Of course the movement is about much more than hype. However, all the attention and engagement tends to muddy rather than clarify the concept of 'local'. The Business Alliance for Local Living Economies ( BALLE) offers guidance on what elements to consider when categorizing businesses as "local'. They suggest that a business must: • be privately held (not publicly traded) • have owners ( >50 %) that live in the region • be registered in the state, with no corporate or national headquarters outside the state • make independent decisions regarding the name and look of the business, business purchasing decisions, practices and distribution 97 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTIONII: DESIRED OUTCOMES - epY(n{/O�CC StYC•tCG)(e5 CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY • pay its own marketing, rent and other expenses without assistance from a corporate headquarters"' Of course some products lend themselves best to the scale and capital investment requirements of large, publicly traded companies and global supply chains. As demonstrated by the analysis in Chapter 8 and 9, the creation of a sustainable local economy requires a balance of large and small, local and non -local businesses, where numerous products and services are locally based, and others are regionally, nationally or globally based. Products and services should be localized as much as possible in the areas of sustainable agriculture, renewable energy, independent retail, zero -waste manufacturing, community capital and green building. BALLE considers these to be the building blocks of a local economy."' A local economy can then be defined as "...largely self - reliant in basic needs, where entrepreneurship and local business ownership are the primary modes of economic security, with firm roots in healthy neighborhoods and the burgeoning green economy.i174 Local economic development expert Michael Shuman purports that local ownership and import substitution are the two tenets of local economic development. Local ownership ensures that working control of a business resides in a community with a defined area, while import substitution means that, "whenever it's cost - effective to produce goods and services locally, a community should do so.i175 A local economy ensures that an area maximizes local talent, local capital and local markets1', by ensuring that local entrepreneurial spirit is fostered and mentored, that capital is made available to bring new businesses and technologies to market, and that markets maximize, demand for locally available products and services. IMPORTANCE OF A LOCAL ECONOMY Direct Economic Benefits Local business has experienced a groundswell of support in the past decade. During the same time that many businesses globalized and outsourced, and their products gentrified, a counter - movement emerged to retain and encourage local businesses that provide towns and cities with their distinct character. As the movement grows, economic impact studies from around the nation provide mounting evidence that local businesses contribute greatly to economic growth, compounding direct, primary benefits by keeping wealth in the community. The City of Tacoma has developed a set of economic development indicators to assess benefits provided to the City: taxes, employment, reinvestment, owner's profit, and purchasing. The benefits of local and non -local businesses in each of these areas are: 1. Taxes: Local and non -local firms provide relatively the same benefit in terms of taxes, although tax structures often unfairly advantage large firms 777 2. Employment: Local and non -local firms both provide employment benefits. However, many of the higher quality jobs of non -local firms (like bookkeeping and advertising) are consolidated at the chain's national headquarters, as opposed to local businesses that carry out those functions in the 172 Shaffer, Don. In Business. (March/April 2005). Defining "Local "in Local First. _ 173 Ibid. 174 BALLE Bold. (No Date). Retrieved November 12, 2008 from hftp:/4!vingeconomies.org/ballebold/econ-dev-landing- pape/7searchterm= building %20blocks 17 Shuman, M. (2006). The Small -Mart Revolution: How Local Businesses are Beating the Global Competition. San Francisco: Barrett- Koehler Publishers Inc., Page 8. 176 Ibid. 177 Mitchell, S. (2006). Big Box Swindle: the True Cost otMega- Retailers and the Fight forAmenca's Independent Businesses. Boston: Beacon Press, Page 173. - 98 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY y�.�1 SECTION II: DESIRED OUTCOMES ec,41,voice StrQteg(eS CHAPTERIO: REVIEW OF BEST PRACrICES FOR CREATING ASUSTAINABLE LOCAL _ ECONOMY community.178 This is especially true in the retail sector where local employment for national chains mainly consist of low paid, no benefit, high turnoverjobs. Studies have found that local business can spend an additional 6%179 on employee salaries, and can create more jobs per million dollars in revenue than chains in every instance —from books, toys and sporting goods stores to limited service restaurants."o 3. Reinvestment: Local firms provide more benefit than non -local firms in terms of business reinvestment. Non -local firms are much more likely to want to exploit out -of -town investments by drawing off business' profits, so reinvestment is less likely. Local businesses that reinvest part of the company's profit into marketing, advertising, new staff, facility improvements, training or new systems not only reinvest profits to grow their business, but also grow the local economy by re- circulating a larger amount of this spending to support local employment and purchasing from other local firms. 4. Owner Profit: Similarly, the profits of local business owners remain in the community and contribute to the wealth creation potential of their communities through local business owners paying local residential taxes, supporting local schools and services, and purchasing local goods and services. 5. Purchasing: Local firms provide a greater benefit than non -local firms by purchasing a greater proportion of goods and services from other local businesses. As a study of businesses in Maine... illustrates, local businesses spent 53% of revenues within the state on employee wages and benefits, inventory, supplies and services from other local businesses, profits accrued to the local owners and contributions made to local charities.182 In contrast, the study shows that a big box retailer with outlets in Maine spends 14% of revenue within the state, mostly in the form of employee salaries, with the remaining 8656 being spent with out -of -state suppliers and the company's corporate headquarters. See Figure 8 for the study's comparison of local and non -local firm spending. Figure 8: Percentage of Spending Comparison: Local and Non -Local Businesses1S3 Chaln Store Locally Owned IBu >iIrc , Percentage of Revenue Spent Within the State 0.0% 10.0% 20.0% 30.0% 40M% 50.0% 60X% 778 Civic Economics. (2002). Economic Impact Analysis., A Case Study of Local Merchants vs. Chain Retailers. Page 6. 179 Mitchell, S. (2006). Big Box Swindle: the True Cost of Mega - Retailers and the Fight forAmerica's Independent Businesses. Boston: Beacon Press, Page 45. 180 Civic Economics. (2007). The San Francisco Retail Diversity Study. 181 Institute for Local Self- Reliance. (2003). The Economic Impact of Locally Owned Businesses vs. Chains: A Case Study in Midcoast Maine. 182 Ibid. 183 Ibid. - 99 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES 6.GY(I+VOIC@ sfral -agies CHAPTERIO: REVIEW OF BEST PRACTICES FOR CREATING ASUSTAINABLE LOCAL - ECONOMY The Multiplier Effect An important impact of local businesses can be found in their secondary, or indirect, economic benefits. When . a greater share of revenues is spent locally on employment, reinvestment, owner profit and purchasing with other local businesses, a business' revenue "multiplies' by re- circulating again and again through the economy via the spending of employees, owners and other businesses. A San Francisco study18. reveals that revenues at local bookstores have seven times the impact of non -local stores, and that local restaurants have three times the impact of chain restaurants. See Figure 9 for details. Figure 9. San Francisco Local Business vs. Chain Reinvestment impact 85 Limited - Service Dining -- m -- - t a, a a h ■ TNal Revenue ®Money Rmd aced in the local Ec y The same San Francisco study revealed that local business has a tremendous benefit on the local economy. Due in part to the multiplier effect, it concluded that a 10% increase in market share for local business would yield $200 million in economic activity and almost 1,300 newjobs. The reverse is also true: a 10% decrease in market share from local to non -local business would deplete the local economy to the same degree."' Supportfor Local Business Support for local business has traditionally arisen from grass roots efforts to support consumer and business purchasing of local goods and services. Networks of local area businesses have sprung up in many locations around the U.S., as well as associations representing independent business (National Federation of Independent Business), and sector specific associations (the American Booksellers Association). In 2001, BALLE was formed to support such local efforts and create a meta - network, a national network of local networks, to provide support, education, and information exchange to grow local economies nationally and worldwide. BALLE held its first annual conference in 2003, and has grown in just seven years to include 60 local business networks, representing more than 20,000 entrepreneurs in North America. It has expanded the scope of its efforts in recent years from a focus on facilitating marketing and fostering local purchasing to a broader focus on economic development, including access to capital (local stock exchanges), and public policy. The 2008 BALLE Annual Conference was squarely focused on local economic development. Current networking activities are focusing on how to use the current economic crisis to ensure that the message of 184 Civic Economics. (2007). The San Francisco Retail Diversity Study. 185 San Francisco Chronicle. (2007). Local Merchants Reinvest in City Their Study Says. Retrieved November 25, 2008 from v✓VWV.sfgate.conVegi- bin /object/article ?f= /da /2007 /05 /03 /BUG58PJQ4V 1.DTL &o =1 &type= business 186 Civic Economics. (2007). The San Francisco Retail Diversity Study. 100 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY �.1 SECTION fl: DESIRED OUTCOMES eprd voie—e ,Arc-tegies CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATINGASUSTAINABLE LOCAL ECONOMY local business is driven home, especially given the potential opportunity presented by the new administration in Washington. BALLE staff and network leaders are currently debating the question of how local governments can best support local business and local economies. The outcome of these ongoing discussions will most certainly help guide governments in the future to support local business. CASE STUDIES OF LOCAL GOVERNMENT SUPPORT FOR LOCAL ECONOMIC DEVELOPMENT The following case studies have been chosen to profile innovative approaches to economic development in support of small, local business from around the U.S. City of Tacoma, Washington Main Streets Program The Main Streets Program is a national revitalization effort in which cities and towns in 34 states have successfully revitalized their business districts within the context of historic preservation. Large cities (Portland, Tacoma, and Pittsburgh) have adapted the model into their broader urban context. Tacoma's Main Streets Program addresses both downtown revitalization and local business needs. The program supports mostly indigenous business, but since any business can technically locate there, non -local businesses may potentially benefit from the program. In Tacoma, downtown business districts are located along the line of a historic trolley grid, which is no longer in operation. Retailers in these areas suffer as a result of 30,000 cars per day in drive - through traffic, a third to one half of which is regional. The volume of traffic has created a planning focus for through traffic movement rather than for a more multi -modal Main Street type of environment, the latter being a goal of regional and local land use policies. The Main Streets Plan aims to create pedestrian oriented streets and neighborhood oriented development. It addresses street parking, traffic and pedestrian access; improves neighborhood livability by diverting through traffic; and, seeks to create greater bicycle and transit access. The main focus of the work is to provide medians, curb extensions and safe crossings for pedestrians and to implement permanent street parking (removing the rush hour restrictions in the curbside lanes) 787 Economic Gardening Tacoma is working with a number of City governments across the country on the concept of "economic gardening ", an emerging movement that is still finding coherence in definition and practice. Tacoma implements its ideals by making tools and resources available to the smallest businesses. For instance, they provide very small businesses with market research and other data that would typically be available only to more resource -rich larger companies. The City will assist existing businesses and start -ups to identify anew and expanded customer base by providing psychographic profiling188 of their current customer base. This profiling, an expensive tool normally limited to extensive (and expensive) market research programs, provides a business with a map of potential new customers. The City will also provide mailing lists if they are available to be used for new marketing campaigns. Fostering Networks 187 Office of Transportation: City of Portland. (2001). Tacoma Main Street Plan, Pages !-it. tae Psychographic profiling goes beyond traditional demographic profiles to include value systems and attitudes that affect purchasing decisions. If a company can provide a profile of current customers, a psychographic profile of existing customers can be created, which leads to identification of potential new markets in areas where non - customers match that profile. Source: Evaluating Target Groups Psycho graphically. Retrieved Nov 16, 2008, from hftp:// 209.85. 173. 132 / search ?q= cache:ZD6_Hp_YpYgJ:www.az- direct.com/sfte /medial 00066453 .pdf" /o3Ft %3D1221652011156 +psychographic+ database &hl= en &ct= clnk &od= 10 &gi =ca &client = firefox -a 101 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES - gpYvoice sfrut'egies CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY The City of Tacoma also encourages local business by partnering with the local BALLE network "Go Local Tacoma ", by supporting local farmers markets and local food co- operatives. They provide both funding and in- kind resources (staff outreach, support and referrals). For instance, Go Local Tacoma incorporated this year and has requested $50,000 per year for the next two years from the City. Although the City has not fully allocated the requested funding, they will commit to providing at least some of the group's operating funds. Fostering Business to Business Purchasing To foster local business -to- business purchasing, Tacoma hired a brokerto investigate potential opportunities, to facilitate transactions between businesses, and to develop the local market potential forvarious imported products. For instance, the program identified that many firms were buying plastic paint tubs from Georgia even though there were many local injection molders that could produce them. It presented the local manufacturers with information about aggregated demand for the product (akin to reverse market research). Tacoma based this broker program on the Oregon Marketplace Program, which was funded throughout the 1980s and 1990s by the Oregon State Lottery, The organization offered free consulting service to businesses in the community to facilitate buying from local sources of supply, and amalgamated orders for the best possible price to drive supply and reduce cost.189 The Tacoma broker program succeeded in facilitating a number of local purchasing transactions, but was eventually terminated due to the difficulty of staffing and managing such a program. Ultimately the City could not offer individuals with the skills to broker business transactions a competitive enough salary to retain them. San Benito County, California In 2005, faced with a faltering economy and caps on growth imposed by a sewer moratorium, San Benito County began a study to assess potential areas of growth. San Benito's Integrated Waste Management Department commissioned BALLE to look at local and sustainable economic development that would fit with their agricultural setting and focus on the market development potential for recycled materials. They began by engaging sustainable business leaders in the community, working slowlyto include more and more businesses to map out potential opportunity areas. San Benito County is a bedroom community of Silicon Valley, with over half its population commuting to tech - sector jobs in neighboring Santa Clara County. This factor confounds community support for local development, since few live and work in the community. The BALLE project identified several areas that could benefit from direct intervention in the community: sustainable agriculture, alternative energy, green building, and manufacturing. The initiative then focused on mapping local production and consumption to produce opportunities for plugging "leaks" in the economy. The Downtown Business Association championed a "local first" initiative, and held a number of local first events. The San Benito Chamber of Commerce agreed to form a BALLE network to support local business. Given the rural and agriculture nature of the area, support for sustainable agriculture was identified for improving the sustainability of existing agriculture, growing the local and organicfood sector, focusing on agricultural tourism, and maximizing agriculture and bio -fuels opportunities on underused . lands. As part of the sustainable agriculture initiative, the Integrated Waste Management Department worked with experts in the town of Reynolds, Indiana ( "Bio- Town ") to assess the potential for the county's energy independence using agricultural and other residues and for providing economic alternatives for struggling farmers. A recent study concluded that insufficient biomass exists in San Benito for such an initiative, but that energy self- sufficiency could be achieved with a combination of biomass and solar energy. 189 Personal communication with representative of the City of Tacoma, November 12, 2008. 102 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY y� SECTION II: DESIRED OUTCOMES eGl-H vOiee StYGtegceS CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING ASUSTAINABLE LOCAL ECONOMY City of Burlington, Vermone" The City of Burlington has supported the development of a local economy for nearly 20 years. Their most successful strategies are based on fostering non - profit groups to support community development goals, supporting entrepreneurship and workforce training, and plugging leaks in the economy to meet community needs. The City matches all economic development activity with the following six principals of local economic development progress: 1. encourage self- sufficiency 2. maximize local resources 3. equalize the burdens and benefits of growth 4. leverage publicfunds 5. protect and preserve the environment and fragile ecosystems 6. encourage full participation of those often excluded The Third Sector The City of Burlington works to fosterthe growth of the non - profit sector to encourage its full participation in helping to support community economic goals. It supports and partners with community development and housing groups, women's small business programs, a software development alliance, the Vermont BALLE Chapter, and Vermont Business for Social Responsibility. In the mid -80s the City went so far as to help develop the non - profit Vermont Energy Investment Corporation (VEIC), which now has over 100 employees. VEIC supports the City's goal to reduce energy demand by providing residential and business energy efficiency programs. It has also partnered with the City to create an ordinance to require that the efficiency of residential buildings be assessed at the time of sale and brought up to code within one year; together, the City and VEIC have worked hand -in -hand to support each other in improving energy efficiency to keep both energy demand flat and energy prices low. Entrepreneurship Support and Workforce Training Support for entrepreneurs in Burlington is informal and very hands -on. The City's Community and Economic Development Office (CED) provides much in -kind support by providing staff resources to assist with governance, business planning and otherforms of ongoing support. The office has an open door policy and the friendly, concerned staff is often busy trouble- shooting problems of local businesses. The City also supports workforce training programs as a means to achieve economic development. For instance, when a small preexisting technology cluster of graphic designers and web developers were interested in expanding but concerned that the city didn't have enough skilled labor, the CED sponsored a non - profit workforce program to work with cluster businesses to help train the employees they needed. The program demonstrated results: one business in the cluster alone has grown from 40 to 200 employees in just a few years. Plugging Leaks Burlington has assessed its economic leakage and the potential for import- substitution, identifying opportunities and the potential for cluster development. Not many of the opportunities drove any interest until 2001 when the city lost many downtown supermarkets19', including the last to serve the area's low- 190 All information in this section is derived from a personal communication with a representative of the Burlington Vermont Community and Economic Development Office, November 14, 2008. 191 The loss of six downtown supermarkets in the early 200s was a result mostly of a format change In the sector that regularly saw store footprints in excess of 30,000 ft 103 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY ��{.I� SECTION II: DESIRED OUTCOMES ectrd�voiee StYQ {+ Eg[e-s CHAPTER S0: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY income population. The closures drove residents to shop in the nearby suburbs, leaving the underprivileged, the elderly and the disabled with few local options. Residents pressured the Cityto fill this gap —after all Burlington is a City that runs its own open access phone, internet and television network, and has a municipally -owned electric utility — residents expected the City to be able to provide groceries to its residents. The City's Economic Development Office undertook a market analysis of the sector, driving interest and providing a supportive business case to potential retailers. This market analysis was essential, driving the number of interested operators from zero to five. The City identified a municipal site forthe market, providing both the building and a 99- yearground lease. When the City's operator selection committee chose a local co- operative without the necessary capital for start -up to operate the site, they went so far as to loan the group $2 million in high -risk construction financing. Launched in 2003, the City Market now has the second highest per square foot sales in the country and has been voted the best food co -op in the United States. It also has deep roots in the community, offering a line of low cost foods to serve less fortunate area residents,.and a host of community service programs like discounts for disabled and food stamp - holding members, and a free lunch delivery program for seniors. Santa Fe, New Mexican' Santa Fe, New Mexico is a unique city with a very large proportion of locally -owned businesses (85%), as well as a large creative sector and a tourist -based economy. The Santa Fe Alliance (SFA) is an active chapter of the BALLE network, with over 600 business members. "Local First" The City of Santa Fe provides $20 -25K per year in financial support to the SFA to undertake its annual "Buy Local" campaign, to maintain theirwebsite, and to print their directory of member businesses to encourage local spending. Support forthe SFA's programs is especially important after a recent study identified that the number of non -local retailers in Santa Fe were growing at more than double the rate of local retailers."' Green Jobs The City also provided fundingforthe SFA's green collarjobs program, which sponsored the training placements of six at -risk youth workers. The program included a college component to ensure that participating youth attended school for part of the placement. All six employees were hired permanently following their placements. The City s mayor is a progressive environmental scientist, who has signed onto the United State Conference of Mayors Main Street Stimulus call to action. This plan calls for $90 billion dollars in federal assistance to support the following: • community development block grant for infrastructure • energy block grant for infrastructure and green jobs • transportation equipment, infrastructure and technology for public transit, Amtrak, highways and airports • water and wastewater infrastructure • school modernization • public housing modernization, and • public safetyjobs and technology 192 All information in this section is derived from an interview with a representative of the Santa Fe Alliance, November 14, 2008. 195 New Rules: The Hometown Advantage. (2004). Santa Fe Alliance Releases Independent Business Study. Retdeved November 18, 2008. from www.newrules,org/ retail /news_archive.php ?bromeby= slug &slugid =215 104 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY �. SECTION II: DESIRED OUTCOMES - eprrak/oice strc•tegies CHAPTER IO: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY The mayors also call for measures to help individuals and businesses. For small businesses, they push for small business administration loans to counter the tightening credit market by providing reduced -fee loans to these businesses.19' Under a currently proposed plan, the City would deal with the current financial troubles by strengthening its economy through enhanced partnerships with local businesses, nonprofits and community organizations. They are also proposing to support local businesses and homeowners in dealing with growing energy prices by investing $500K in energy conservation and alternative energy projects. LOCAL GOVERNMENT STRATEGIES TO SUPPORT LOCAL ECONOMIES Provide Capital Capital is needed to foster local business. Undercapitalization is a common problem for retailers, and is sometimes due to the lack of long -term capital for local business development. Finding funding sources is challenging for start -ups in retail categories where costs are high — grocery stores for example —or to expand a business with a major investment in inventory or equipment. Loans and equity capital are options for supporting capital investment in local business development 195 As we saw in the Burlington example, the City provided much - needed capital to get what is now a thriving co -op supermarket off the ground. The market now not only has the second highest sales per square foot in the country; it also provides essential services to the community and prevents sales from leaking out of the community into big box stores in the suburbs. Governments are sometimes in a good position to direct more capital into local business development, since they manage sizable portfolios of reserve funds: "One step cities can take is to shift some of their reserve funds into deposits linked to local business lending. In 2005, for example, the City of Santa Cruz, California, began transferring some of the money in its $80 million investment portfolio from corporate and government securities into certificates of deposit held at two locally owned financial institutions, the Bay Area Federal Credit Union and the Santa Cruz County Bank. City Councilor Ryan Coonerty, who proposed the idea, said both institutions will use the funds to expand local business lending. ""' Supporting small businesses in gaining access to capital is especially important given the current credit crisis and the tendency for big banks to squeeze small business out of access to capital. Support for the Third Sector In order for local governments to be effective, they need non - profit partners and a receptive business community. A receptive business community can be fostered through mentoring programs, by developing business cases for sustainability initiatives, and providing case studies showing that success in sustainability brings in more business. But in some cases, the non - profit sector either does not exist or has insufficient capacity to support community economic development goals. The support of non - profits also helps to leverage other funding sources for meeting community goals, as many government- non - profit partnerships leverage other private and business resources to have a greater impact. Government funding often provides the seed funding that gets things moving by providing the necessary 194 US Mayors Main Street Stimulus Plan. (2008). Retrieved November 18, 2008, from www. usmayors.orglmainstreetstimulus 195Mitchell, S. (2006). Big Box Swindle: the True Cost of Mega- Retailers and the Fight forAmerica's Independent Businesses. Boston: Beacon Press, Page 234. 105 Mitchell, S. (2006). Big Box Swindle:.the True Cast of Mega - Retailers and the Fight forAmenca's Independent Businesses. Boston: Beacon Press, Page 235. 105 STRATEGY FORA SUSTAINABLE LOCAL ECONOMY y�.l�1 + SECTION II: DESIRED OUTCOMES @.prt�voiCe. ArGf@gieS CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING ASUSFAINABLE LOCAL ECONOMY legitimacy for other funders to follow. In addition to the case studies profiled, the following are examples of local governments supporting the non - profit sector: 1. The City of Boston set up an NGO to provide advice and technical support for businesses interesting in solar power installations under the Solar Boston program. 2. The District of Columbia Department of Housing and Community Development (DHCD) supports non- profit organizations with the goals of creating/maintaining stable neighborhoods, retaining /expanding the city's tax base, promoting economic opportunities through community empowerment, and retaining /creating job and business opportunities forthe benefit of Washington, DC residents. Their support of the Latino Economic Development Corporation (LEDC) provides crucial funding forsmall business microloans, technical assistance, training, commercial fagade improvement, and organizing services, helping low to moderate - income business owners and entrepreneurs compete, thrive, and provide fortheir families and the community.19' 3. The City of Austin sponsors an Austin Independent Business Alliance (AIBA) program to develop Independent Business Investment Zones (IBIZ). In the program, small clusters of businesses across the city are identified and organized. City- sponsored banners advertise the area as independent, announcing "Local Spoken Here ", and brochures for each area list its independent business participants. The program exists in five areas, which will be expanded in the future.198 Research Local Economy In line with the axiom, "you can't manage what you don't measure ", local governments that profile the extent to which local ownership dominates the local economy provide a valuable benchmark for local business ownership to set goals, determine strategy and develop policies to support the sector. Many other areas have made.use of state statistics on business ownership to build a profile of local and non -local businesses of various areas of the economy, In addition, as the case studies above illustrate, there is value in conducting research into an area's economic assets as well as its leaks to expose opportunities for local economic development. Such studies often support local business sectors by providing in -depth market research to support small business start-ups or expansions. The research, provides a foundation for business planning and supports access to capital by providing valuable research that small business frequently can't afford. Foster "Local First" Purchasing Business to Consumer To drive market development for local business, it is important to support education and awareness building amongst consumers on the benefits of buying local and provide tools that help to market and promote these aspects of local business. Local business labels and "buy local" days support local purchasing by residents, as can local business directories and coupon books. The Buy Local Campaign in Bellingham, Washington has been so effective that a survey of 300 local residents found that 69% were aware of the "Think Local First" campaign and 58 %said they made a greater effort to shop with locally owned businesses than before the campaign started199 197 LEDC. (2008). About Us and LEDC: Partners and Funders. Retrieved November 16, 2008 from http: /Am .lededc.org/ 198 Austin Local Independent Business Alliance. (2008). Retrieved November 17, 2008 from hUp: /Mn . ibuyaustin. coMnews /HoHoHomegromHolidays.htmi. 19 The Hometown Advantage. ( 2006). Study Finds More People Shopping Locally Owned Thanks to "Think Local First Retrieved December 4, 2008, from http:/ Awiw. newrules .org /retaiUnews_slug.php ?slugid =349 906 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES ec+rtl�voiee :Arc- egies CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY - One of the most successful tools to encourage local business purchasing is the local business loyalty card. Like other loyalty cards, spending at participating local businesses allow users to earn and redeem points. Participating businesses often offer a discount to cardholders, providing a further incentive to buy locally. Many cards are in operation, most offering points redemption for either discounts or merchandise at participating retailers, or for a donation to a local school, nonprofit, church or other charity chosen by the cardholder, or some combination thereof."' The Interra card is a promising local business loyalty card that provides a link between local gift cards and debit and credit cards. It aims to become "the community - friendly alternative to Visai201, and projects that it will generate $500 million of nonprofit donations, $44 billion in new revenue to local economies and 99,000 new jobs, if it can attract five million members over five years. As of 2006, nearly $1 million had been invested in the project already (2006), and the card is being used in several areas of the U.S., including Ohio, Boston, and Puget Sound.102 Business to Business Fostering business networking and collaboration can encourage business -to- business local purchasing. Mapping out local goods and services for business inputs and employee needs will help, but face -to -face networking can help supply chain collaboration even more. Allowing local businesses to maximize the advantage of being small, flexible and responsive, putting them indirect dialogue with potential customers allows them access to their markets, creates a greater understanding of market need and can drive innovation. This type of networking also allows for local buyers to bulk purchase sustainable goods to drive down the cost, and can provide aggregated demand to existing or potential local suppliers. Further, it potentially lays the foundation for measures that facilitate greening of business, and provides the necessary support for a thriving local business sector. For instance, sustainable purchasing buying clubs, mentoring programs, waste exchanges, co- location projects and eco- industrial networking203 strategies can all improve the sustainability performance of businesses through better relationships and collaboration. Business to Government The most powerful way to foster local purchasing and provide a market for local goods and services is to make local purchasing a priority at the government level. Governments have the opportunity to play a leadership role and speak from a position of trust and authority with other purchasers, be they businesses or consumers, by providing a preference for local suppliers in supply contracts and bid documents.20' There is precedent for these type of preferred supplier relationships in the area of social purchasing, where purchasers direct award 20' Mitchell, S. (2006). Big Box Swindle: the True Cost of Mega - Retailers and the Fight forAmedca's Independent Businesses. Boston: Beacon Press, Pages 254255. 201 Shuman, M. (2006). The Small -Mart Revolution: How Local Businesses are Beating the Global Competition. San Francisco: Berrett- Koehler Publishers Inc., Page 148. 202 Shuman, M. (2006). The Small -Mart Revolution: How Local Businesses are Beating the Global Competition. San Francisco: Berrett- Koehler Publishers Inc., Page 148. - - 203 Eco- Industrial Networks facilitate businesses to work together, making the adoption of green technologies more economically feasible, encouraging knowledge exchange and social networking to result in better informed relationships that make it easier for businesses to pursue new practices. Collaboration increases the number of financially and environmentally beneficial actions available to businesses. Source: Eco- Industrial Solutions. Zoo Sustainability Purchasing Network. (2007). Newsletter: Making a Social Impact Through Sustainable Purchasing. Retrieved November 17, 2008 from w ..buysmadbc.wmlindex.php? option= comydm_lhplist <emid =36 &message =88 107 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES eard voice strategies CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY with social enterprises20', carve off an entire supply category (catering or office cleaning), or commit a portion of annual spend to social suppliers to provide support for local market development. Like social enterprises, local suppliers are potentially disadvantaged by government procurement processes due to their small size, limited capacity and resources. So providing a preference for them both in policy and practice will help them compete with non -local businesses. The UK government, in recognition of the important part that small and medium sized enterprises (SMEs) play in the UK economy, has focused its procurement program on removing barriers that may exclude smaller businesses. They have assessed the existing share of procurement won by SMEs, produced a public procurement toolkit for social enterprises, developed a portal for advertising lower value public contracts in a central place, and trained their procurement staff on contracting with SMEs. Among their many success stories . is the Department for Work and Pensions, who increased the number of SMEs successful in bids for computer contracts. The Department reorganized a formerly large (or "bundled" contract) into four smaller lots, and accepted both national and regional bids for the lots, which allowed SMEs to bid for more manageable pieces of business.211 In another example, the Shire of Augusta — Margaret River, Australia has a local purchasing policy in recognition of the role it can play in local economic development and assisting local industry. In addition to a 5% price premium (up to $20,000) for local goods and construction services that they procure, they support local businesses competing for government contracts by advertising opportunities in local newspapers, by appropriately sizing contracts to suit market capacity and to competition by small business, by ensuring that buying practices, procedures and specifications do not disadvantage local suppliers and by ensuring transparency in quotation, tendering and contract management practices.20' U.S. state and local governments combined purchase more than $1 trillion worth of goods and services per year. Government procurement is an important way to leverage existing spending to support local businesses 208 Since bidding procedures and consolidated contracts are likely the biggest impediment for local firms to compete for government business, innovative approaches to removing these barriers should be explored. Grow From Within Incubate Businesses Business incubators accelerate businesses development by providing support, services and resources. Businesses graduating from business incubator programs create jobs, revitalize neighborhoods and commercialize new technologies and in doing so strengthen local, regional and even national economies. The U.S. National Business Incubation Association (NBIA) estimates that: • North American business incubators have helped businesses create half a million jobs since 1980 205 A social enterprise is a business formed to meet a market need for a product or service while providing employment for disadvantaged populations like the mentally or physically disabled. Organizations purchase from social enterprise as an antidote to the charity model of creating social advantage. By contracting Wth businesses that supply social value, organizations support the social mission of the business and help support community benefits. 205 UK Government Office of Government Commerce. (No date). Small supplier... better value? Retrieved November 26, 2008, from htt/pn : /A .ogc.gov.uk/ key_ policy_ principles_ creating_opportunities for_smes_ and — third_ sector_ organisations.asp 20 Shire of Augusta — Margaret River. (No Date). Local Purchasing Policy. Retrieved November 27,2008, from http:/1209.85.173.104 /search ?q= cache:RemctXQvMcAJ.~, ammc. wa. gov. aut exedpolicy /O40804locaipurchasepolicy.pdf +impact +of +loc '- US EPA. (1998). The City of Santa Monica's Environmental Purchasing: A Case Study, Page L 108 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES. epYI I�VO1Ce strategies CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY • Every 50 primary jobs created by businesses that go through incubator programs generate approximately 25 more secondary jobs in the same community. • In 2001, North American incubators assisted more than 35,000 start -up companies, providing full time employment for nearly 82,000 workers and generating annual earnings in excess of $7 billion. • Business incubators reduce small business failures. NBIA members report that 87% of graduating firms are still in business209. Fostering entrepreneurship is especially important in the coming era of baby boomerwealth transfer. As we ready ourselves forthe societal changes that will result from the largest wealth transfer in history, (estimated by some at $41 trillion dollars ... ) aging baby boomer business owners will need to be replaced by new entrepreneurs or risk the takeover of many sectors by non -local businesses. "Mentoring from other local business owners, specialized training, and one -on -one guidance are often cited by new entrepreneurs as critical to their successi21'; entrepreneurship training and mentorship programs should be married to create strong new local businesses. Support Workforce Training Workforce training programs in targeted sectors can help an economy provide better local jobs for its residents. This approach has worked well in the state of Oregon, where economic development works closely with research institutes and the education sector to ensure that local education and training all work together to support economic development plans n2 Support of the green sector also provides an opportunity to turn skilled labor in traditional "blue-collar" sectors like manufacturing and construction into "green - collar" workers. For instance, green building construction work, organic farming, green technology manufacturing (solar panels), and bicycle repair all are considered "green jobs." Estimates that include the renewable energy and clean technology sectors rank green - collar as the fifth largest market sector in the U.S. Many of thesejobs restwith small local businesses. Van Jones, author of The Green Collar Economy and a leader of the green jobs movement in the U.S., says that "by their nature, green jobs are localjobs - and these ideas will have extra impact .., because of the "multiplier effect" a town gets when money is spent on a local business instead of a chain or out -of -town company... "213 Workforce training programs can also promote the growth of new business ownership from within companies to support the wealth transfer discussed previously. The entrepreneur most likely to succeed in running the business of a retiring baby boomer is one trained and mentored from within the business itself. Create Revenue from Local Businesses in Key Sectors In cities that derive a high portion of revenue from retail store sales tax, chain stores are often attractive because they promise high sales and associated sales tax revenue to the City. There is no increase in retail spending when more retailers come to an area. The only change is a shift from local to chain stores, often driving local retailers out of business. For instance, in Austin, Texas, locating a chain bookstore across from 209 New Zealand Trade and Enterprise: Incubators — more Information. Retrieved November 15, 2008 from www. nzte.govt.n7/sectiordl4630.aspx 270 All Business. (No Date). Huge wealth transfer predicted: bequests maybe safe, despite recession and longer4iving. Retrieved November 17, 2008 from hUp: /Aw .ail business. cam / professional- scientifictscientific- research/571065- 1.html 211 Mitchell, S. (2006). Big Box Swindle: the True Cost of Mega - Retailers and the Fight forAmerica's Independent Businesses. Boston: Beacon Press, Page 231. 212 Sustainable Industries Journal. (2008). Where Does Green Business Thrive? Retrieved November 27, 2008 from ht ttp:// wwwsustainableindustdes .conVgreenmarketing[l 9606599.html 21 Jones and Nyskida. (2007). Green - Collar Jobs for Urban America. YES! Magazine 709 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY yr SECTION 11: DESIRED OUTCOMES eGeY vo�Ce si'rategies CHAPTER S0: REVIEW OF BEST PRACTICES FOR CREATING ASUSTAINABLE LOCAL ECONOMY _ _ local merchants selling similar goods at similar prices resulted in reduced economic activity of $2.4 million annually..14 To support local business at the same time as increasing retail sales tax revenues, a City can: • encourage local retail services not currently served by the community, plugging leaks and bringing new dollars to the area • attract retailers with lines of new goods to an area to drive consumer traffic to the area, thereby benefiting all merchants (e.g. locating a cinema to draw in potential customers for neighboring stores) • develop area clusters by bringing a complementary line of goods to the market to increase browsing with merchants with similar but unique lines of goods (e.g. cluster of antiques and home goods stores)... The experience of many Main Street programs shows how the analysis of shopping districts, based on the . markets they serve and the local need for goods and services can help guide retail development by identifying local business opportunities. They advise that market development should be carefully guided by a business development plan that "should recognize what the local market opportunities might be and then spec out exactly what they d like to'see —these kinds of businesses on the corner, these businesses to function like magnets, these kinds of businesses on this block —so the revitalization organization is thinking like a shopping mall developer would. "216 Policy To support local businesses in development or redevelopment projects, cities can look to innovative practices from around the country in applying special zoning or policy requirements in new developments to support local business. In 2004 the City of Austin, Texas negotiated with the developer of a five -block parcel to lease at least 30% of retail spaces to local businesses. A local broker who knew the community well secured agreements with local businesses and merchants looking for second locations. The spaces were offered at below market rates, and gradually increased over a number of years to market rates. In the interim, the businesses could establish a customer base in a downtown area that had been a retail dead zone for a number of years. By the end of the 2005, with the project only partially complete, over 70% of spaces were leased to local businesses. Since the stores were located in a "retail dead - zone ", it improved the viability of the project, since the same chain stores that could have moved in to the area also have other outlets in more popular shopping areas in the suburbs; the local business strategy thereby created a more unique and attractive shopping destination for the area .217 Port Townsend, Washington is a city with a small town atmosphere and a strong sense of community. It is a resort town that seeks to preserve its "residential village" appeal, and the City's Economic Development Department takes on the responsibility of ensuring that development is consistent with communityvalues 211 214 Civic Economics. (2002). Economic Impact Analysis: ACase Study of Local Merchants vs. Chain Retailers, Page 6 and 11. 215 Civic Economics. (2002). Economic Impact Analysis: A Case Study of Local Merchants vs. Chain Retailers, Page 6. 216 Mitchell, S. (2006). Big Box Swindle: the True Cost of Mega-Retailers and the Fight forAmerica's Independent Businesses. Boston: Beacon Press, Page 229. 217 Mitchell, S. (2006). Big Box Swindle: the True Cost of Mega- Retailers and the Fight.forAmerica's Independent Businesses. Boston: Beacon Press, Page 241. 218 City of Port Townsend, Ordinance No. 2896 An Ordinance of the City of Port Townsend Amending the Port Townsend Municipal Code Adding Chapter 17.05, Defining and Regulating Formula Retail Establishments to Title 17 zoning. Retrieved Nov 5, 2008, from hftp:/ 1209 .85.173.1321search ?q= cache:61gHlti EFRgJ.w .mmc.org/ords /P57o2896.pdf +port+iownsend, +WA +local +economic+developme nt &hl= en &ct= clnk &od= 5 &gl =m &client =fimfox -a 110 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES eQY(I�V6•Ce StYA- YC-'l�i ( @S CHAPTER IO: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY A 2005 City Ordinance offers an example of City policy that supports local business by restricting the growth and dominance of chain stores and restaurants. The Ordinance limits "formula retail" (retail stores and restaurants that follow a formula in providing merchandise or service) to certain parts of town, will not allow them to co- locate, and limits the size of theirfootprint and store fronts. The Citys Comprehensive Development Plan includes a "Diversified Manufacturing & Small Business" component that calls forthe City "[tlo support current commercial and manufacturing enterprises, and encourage the formation of small businesses and relocation to Port Townsend of small scale locally managed businesses as a vital part of Port Townsend's economy" by "encouraging the formation and expansion of cottage industries and light manufacturing' and "the development of a diversity of local businesses which serve the needs of residents and visitors °219 With a plan to enhance and attract small and medium sized businesses to serve the community's needs, the City saw the need to limit chain stores that it felt could hamper the City's "Comprehensive Development Plan" goals. The Plan aimed to have a diverse retail base with a unique retailing personality comprised of a mix of businesses ranging from small to medium to large and from local to regional to nationa1.,220 New Model of Economic Development After years of studying the outcomes of economic development around the nation, Michael Shuman proposed a new model to nurture small business and provide a stable basis for local economic development. Figure 10 illustrates the elements of that new model: Figure 30: Economic Development5upport for Local Business Markets Alliances Capital — Local Business Talent Demand Policv Chanaes 1. Capital can be provided in various ways to ensure that local businesses have the necessary funds to start and expand. 2. Demand can be fostered by educating the public on the importance of buying local, by facilitating business -to- business purchasing, and by supporting loyalty cards, gift cards, coupon books, and debit and credit cards that include benefits to local business and the community. 219 Ibid. 220 Ibid. 111 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES @qYI I�VO1Ce SttQt6g'(+eS CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY 3. Policy changes are required, mostly to retract incentives that favor large outside corporations and disadvantage local businesses. 4. Talent can be fostered with support for entrepreneurship training and job skills training, and working with colleges, universities and trade schools to ensure that curriculum support local economic needs. S. Alliances like BALLE are necessary to network, support and provide leadership for local businesses. 6. Markets are fostered through a focus on increased consumer, business and government purchasing."' The building blocks of local economic development are local planning, local training, local investing, local purchasing and local policymaking. Although there are many good examples of each, to date there is no one community that has managed to link all five types of action into a coherent plan. 222 Mr. Shuman advises policymakers to remove all public financial support for non -local business, and to focus both financial and government staff resources on fostering and supporting local businesses. Local studies to catalogue unused assets and measure imports thereby identifying business opportunities that best benefit the community should then be prepared to provide the research for community - building and business development. Businesses can be incubated in the areas of opportunity identified, through entrepreneurship training and mentorship. Place -based scholarships... can provide an incentive to foster new skilled workers to feed homegrown talent to local businesses. These efforts can be augmented by support for local purchasing, local investing and efforts to reform local public policy.224 Economic Development in Santa Monica The City of Santa Monica's Economic Development Division aims to strike a balanced mix of businesses that both provide valuable services to residents and provide the City with a strong and growing local tax base. Their efforts focus on the importance of neighborhood - serving businesses, in identifying and enhancing emerging key sectors, and in promoting the city's commercial districts. Most of staff resources are consumed in supporting the City's Business Improvement Districts (BIDS). Business Improvement Districts Business Improvement Districts are formed by the City at the request of businesses and property owners in an area. They provide funding from an assessment levy on businesses or properties for promotional efforts and maintenance or operational needs. The City has five BIDS and one Property -Based Assessment District (PBAD): • Downtown Santa Monica Property Based - Assessment District • Third Street Promenade and Downtown District Maintenance • Downtown Parking and Business Improvement Area: Retail Only • Main Street Parking and Business Improvement Area • Montana Parking & Business Improvement Area • Pico Boulevard Business Improvement District 221 BALLE Conference Proceedings. (2008). Presentation by Michael Shuman, Author of the Small -Mart Revolution and Going Local. 222 Shuman, M. (2006). The Small -Mart Revolution :. How Local Businesses are Beating the Global Competition. San Francisco: Berrett- Koehler Publishers Inc., Page 190. 223 Place-based scholarships offer students low /no Interest college loans for out -of -state education if they return to settle in the community. They aim to prevent brain -drain to other states, keeping intellectual capital and skilled workers in the region. 224 Shuman, M. (2006). The Small -Mart Revolution: How Local Businesses are Beating the Global Competition. San Francisco: Barrett- Koehler Publishers Inc., Pages 186 -188. 112 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES eGtrf{�voice st- rat -egies CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING A SUSTAINABLE LOCAL ECONOMY Downtown Santa Monica Property Based Assessment District Small Business Development Centel" Santa Monica offers free business space in Santa Monica College to the Small Business Development Center (SBDC). SBDC offers counseling, training and resources for start -ups and small business owners in the logistics - import/export, hospitality /tourism, manufacturing, environment /green technology, retail /fashion, and alternative fuel /advance transport sectors. Santa Monica's Economic Development Division operates on a small budget to support business development in the city. The Division has made significant efforts to provide local businesses with leasing opportunities in City -owned real estate, providing a preference for local business, working to keep lease rates low, and ensuring that opportunities are widely advertised in the local community. A 2007 assessment of the City/s competitive bidding process shows that 83% of the time the competitive process solicited bids from independent, non -chain businesses 126 In light of the need to support local business in the areas of capital, demand, policy, talent, market and alliances, the Division's efforts are focused on facilitating capital for necessary area improvements, in supporting talent, and in policies to provide preference for local business in certain City -owned properties. The City can provide furthersupport to develop markets by ensuring a strong preference for goods and services sourced from local business, and ensuring tendering processes provide them with market opportunities. The City can also foster demand by supporting demand through education, business networks and consumer loyalty programs. Perhaps the most important way the City can provide support is through providing much - needed capital for local business development. Since the most important barrier to entry or expansion into Santa Monica market is likely the cost of real estate, the City could provide graduated lease rates to allow local businesses to break into new markets and build a customer base. Business Roundtable?27 The Business Roundtable was created by the Santa Monica Chamber of commerce to provide an opportunity for dialogue between the City of Santa Monica and the business community. The Chamber's Government Affairs Director and 30 business leaders are working with City officials to identify important issues affecting local business. CONCLUSION This chapter provides a definition of local business and local economy, and suggests that Santa Monica prepare a baseline of local business in its economy. The benefits of local business are clearly demonstrated — both the direct benefits of employment, supply chain, reinvestment and profits, and the indirect benefits of a greater percentage of business dollars and profits circulating through the local economy. Although some sectors lend themselves to the scale of global supply chains and production, in many sectors, local businesses should be fostered because of their beneficialim pact on economic development. Details of best practice from around the country provide numerous strategies for local governments to consider in providing support, financing and programs to foster a more sustainable local economy. The new model of economic development proposed provides a frameworkfor assessing future City programming and resources. 225 Small Business Development Centre. (2008). Retrieved November 26, 2008, from http: /Aww.sme.edu/sbdcl 226 City of Santa Monica Information Item. 2007. Small Business Incentives in Leasing and Licensing RFPs. Accessed December5, 2008 from http: /hvwwOl.smgov, net/ cityclerklcounciVnfo"ation_items /2007 / SmallBuslncentives.pdf 227 Santa. Monica Chamber of Commerce. (No date). Business Roundtable. Retrieved November 26, 2008 from http:/ N, ww. smchambeccoMroundtablefindex .html 113 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES earthwlce strai"agles CHAPTER 10: REVIEW OF BEST PRACTICES FOR CREATING ASUSTAINABLE LOCAL ECONOMY OBJECTIVES This chapter has two objectives. First, analyze the existing economic development indicators (ED) found in Santa Monica's Sustainable City Plan and recommend changes to the ED indicators forthe City based on this analysis. Second, outline methods that facilitate data collection for the new ED indicators that are recommended in this chapter. METHODOLOGY - - In order to assess the economic indicators in the Sustainable City Plan, indicators in other jurisdictions were compared to Santa Monica's using information from a web -based review. The cities are the same benchmark jurisdictions used in Chapter of this report, namely: • Pasadena, CA • Santa Barbara, CA • San Francisco, CA • Portland, OR • Seattle, WA The indicators for all six of the cities are organized below in Table 38. Each of these indicators is then analyzed with regard to a number of criteria for designing effective indicators adapted from a study by the City of Seattle 128This analysis is presented in Table 39. A short list of selected indicators based on the above analysis is summarized and compared to the original list of ED indicators from Santa Monica's Sustainable City Plan in Table 40. The appropriate data collection methodology for the recommended ED indicators is presented in Table 41. WHAT IS A SUSTAINABLE DEVELOPMENT INDICATOR? According to the International Institute for Sustainable Development229, sustainable development indicators measure sustainability or sustainable development performance. As most sustainability indicators link environmental, economic and social indicators, measurement of sustainable development should be based on indicators that signal: 1. The pressure that society puts on the environment (in the form of pollution and resource depletion) 2. The resulting state of the environment compared to desirable (sustainable) states, and 3. The response by human activity in the form of political and social decisions, measures and policies The City of Pasadena offers the following definition of a sustainable economy: 'A community with a thriving economy that provides all residents with equal access to basic resources, enhancing long -term community vitality." 230 According to this definition, it is not surprising that ED indicators for some regions expand the definition beyond strictly economic ones, such as indicators in the areas of Employment, Local Sustainable Business, 228 Alfas, M., Arnold, J., Bollinger, D., Breslow, S., Cannon, S., Carroll, N., et al. (March 2004). Indicators of Sustainable Community, 1998, Retrieved November 10, 2008, from http : /Aww.sustainableseattle.org/ Programs /Regionallndica tors/19981ndicatomRpt.pdf 229 International Institute for Sustainable Development. (2007). Retrieved November 11, 2008, from httg: /AW ..iisd.org /IC /INFO /ss9504.htm: _ 23 City of Pasadena, Public Health Department. (2002). Pasadena /Attadena Quality of Life 2002 Index, P.3 114 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY �aJ! SECTION II: DESIRED OUTCOMES eCtt(I Voiee SttOtteg[eS CHAPTER 11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS Education and Health Care Services. Although there is some overlap, there is a wide disparity in choices for ED indicators in the cities studied. Notably, while some cities spread their ED indicators fairly evenly in the areas of economy, employment and local sustainable business, other cities also.include indicators from education and health care services areas. Pasadena, Portland and Seattle include indicators such as Academic Achievement in Public Education, Literacy and Life -Long Learning, Leadership and Entrepreneurial Development (Education), Access to Health Care, Child Care, Transportation and Civic Involvement, Health Care & Services. Similar indicators are included in the goal areas of Transportation, Community Education& Civic Participation and Human Dignity in Santa Monica's Sustainable City Plan. Accordingly, they have not been included in this analysis. The ED indicators used by Santa Monica and the cities selected for comparison is presented below Table 39. Economic Development Indicator Summary for Santa Monica and Comparable Cities.. Poll `a^� Iglu 144 v -: G '=s. � 'rG ��l` N m �� W,d fi0 motif �f 1 � ,.. k NN 3 K s -MR, . • • Output Economic liversity 'E� Employment Concentration M Cost of Living WuHousing Affordability Children Living in Poverty Employment or Number of 1 •• ••• Unemployment Rates Higherthan the Government-Defined Full Employment-- NONE � Rate v 'A Unemployment" g Quality Job Creation or �--�-- Leadership and Entrepreneurial Development Gu j O % People Employed in the CltyWho Live In City Local Emplilymdnt if City Staff Income •. • Distribution of Personal Income 231 Different jurisdictions not surprisingly have different terminology for their indicators. in Table 38, when indicators were measuring the same thing but cities refer to them by different names, then the indicators are combined into one row and separated by the word "OR ". A dot in any of the cells indicates a citys use of the corresponding wording of the indicator. For example, "Income Disparity' is listed in the same box as "Distribution of Personal Income ", separated by the word OR since they are measuring similar things. The dots show the indicator referred to as "Income Disparity' in Santa Monica and "Distribution of Personal Income" in Seattle. 915 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES ectir _e strc i-egies CHAPTER 11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS Table 39 (cont d): Economic Development Indicator Summary for Santa Monica and Comparable Cities Resource Efficiency of Local Businesses or J Number of Manufacturers Using Recovered Secondary Materials As Raw Material or Energy Use Per Dollar of Income" # of Enterprises Adopting ISO 14000 or Business Engagement In Sustainability Of Dollars Spent Locally Business Reinvestment in Community or Community Reinvestment Jobs- Housing Balance Agricultural Crop Values # Of Markets /$ Spent at Farmers Market Sources: Santa Monica CA: Sustainable City Plan Pasadena CA: Pasadena /Altadena Quality of Life 2002 Index, City of Pasadena Public Health Department Santa Barbara CA: http:// www. es. ucsb. edu/ proj /135Bindicators /Santabarbara /economic /crops.html San Francisco CA: http: / /www. sustainable- citV.org/Plan /Economy /indicato.htm Portland OR: http: / /www.portlandonline.com /shared /cfm /image.cfm?id= 133058 Seattle WA: http: / /sustainableseattle.org /Programs /Regionalindicators / CRITERIA FOR EFFECTIVE INDICATORS J J V "The indicators a society chooses to report to itself about itself are surprisingly powerful. They reflect collective values and inform collective decisions. A nation that keeps a watchful eye on its salmon runs or the safety of its streets makes different choices than does a nation that is only paying attention to its GNP. The idea of citizens choosing their own indicators is something new underthe sun — something intensely democratic." 232 — Donella H. Meadows Indicators are as varied as the types of systems they monitor, yet there are certain characteristics that effective indicators have in common. The following criteria for indicators based on a Seattle stud Y133 have been customized and used to measure the effectiveness of indicators for Santa Monica and surrounding cities: 1. Relevant. They fit the purpose of measuring and relaying something about the system being investigated. In the case of ED indicators for Santa Monica, they illustrate something basic and fundamental to the long -term economic health of the community over generations. 2. Meaningful. The crucial role of indicators is communication. Perhaps more important than providing data, indicators elicit reactions. Good indicators should be imaginable, not eye - glazing numbers, and resonate with the intended audience. 232 Meadows, D. '(Sept/Oct 1993). Using Salmon Runs and Gardens to Measure Our Well- Being. Pmeline. 233 Alfas, M., Arnold, J., Bollinger, D., Breslow, S., Cannon, S., Carroll, N., at al. (March 2004). Indicators of Sustainable Community, 1998, Retrieved November 10, 2008, from http: /Mww.sustainableseaUle.org/ Programs/ Regionalindicators 119981ndicatorsRpt.pdf 116 STRATEGY FOR ASUSTANABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES eQr yy�� i/ voICe s1"rctegies CHAPTER 11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS 3. Speak to abroad audience /Attractive to local media. Aligns with community values. The media publicizes them and uses them to monitor and analyze community trends. 4. Statistically measurable and available. Data exists that is geographically relevant, and preferably comparable to other cities. If data is not available, a practical method of data collection could be created. 5. Logically or scientifically defensible. Understandable rationales exist for using the specific indicator and for drawing general conclusions from it. 6. Reliable. One must be able to trust what the indicator shows with data from legitimate sources In addition, indicators should be measured consistently overtime, so that one has comparable data. 7. Leading. Ideally, indicators give information while there is still time to act. Carbon emissions are an example of on indicator that provides advance warning of global warming. That being said, many indicators that measure performance are still useful. 8. Actionable. Is it policy- relevant? Does the indicator have relevance for policy decisions for all stakeholders in the system, including the least powerful ones? Can anything be done by Santa Monica to affect the indicator? Complementing Seattle's findings, the City of Portland states the following criteria for what constitutes an effective sustainability indicator 234 1. they are relevant and show you something that you need to know 2. they are easy to understand 3. they are reliable and you can trust what they are telling you 4. they are based on accessible data that is available or can be gathered Evaluation of the Economic Development Indicators Table 39 below evaluates the indicators from the six cities using the eight criteria for effective indicators described above. The criteria were tailored for fit and relevancy to Santa Monica's context. The table establishes two categories of indicator names. The'first is "something that is measured ", (e.g. economic diversity). The second is "how it is measured" a tangible and measurable piece of data (e.g. maximum percentage of economic output from anyone business sector). The column "Addition ?" flags indicators that should be considered for addition to the existing ED indicators. 234 City of Portland. (2008). Retrieved November 9, 2008, from http:// wim. portlandonline .condshared /ofmfimage.cfin? id= 157005 117 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES @Q►'(I�VOICe sfFQfegies CHAPTER 11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS �0.1e An. L.Ai�..rn. F inL w *inn Local Employment Oty -wide/ Annual City -wide Revenue by Summary J J J J J J J Economic Output Category City Maximum% of Economic Output From Any J J J J J J J J Economic Diversity One Business Sector Distances City Staff Travel J J J J J Cost Of Living Living Cost VS. Household Income J J J J J J J J J J Number of Households in Rental- Assistance/ J J J J J J Waiting List Estimated Basic Family Budget J J J Housing Affordability % of Overcrowded Households J J J J Living Wage J J % of Households Overpaying J J J J J J J The Number of Children Under Living in J J J J J Children Living in Poverty Poverty in the City Unemployment Rates J J J J J J J J J Number of Job Search, Placement, Training or J J J J Employment Career Counseling Programs Number of New, Relatively High - Paying Jobs J J J J J J Opportunities for Employees; J J J Quality Job Creation Internships /Mentorship Programs Distances Travelled to Work J J J J J J Local Employment Oty -wide/ % People Employed In the City Who Live In the J J J J J Jobs Housing Balance City Number Of lobs Per Household Distances City Staff Travel J J J J J J J Local Employment of City Staff J J J J J J %of City Staff Who Live in City- Estimated Basic Family Budget J J J J J Living Wage Estimated Household Income 118 STRATEGY FORASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES eCtYlk/O;CE_ stj-Ck eg1eS CHAPTER11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS 119 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES e-cw OAce StYGt��ie.S CHAPTER11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS Indicators Recommended forAddition Based on the analysis in Table 40, a number of indicators are recommended to be added to the existing set of indicators. They are discussed below. Due to its relevance to the strength of the local economy, Unemployment Rate was considered to bean important indicator. The State of California's Economic Development Department (EDD) provides a reliable, city- specific, source of information updated monthly. June 2009 preliminary data shows an unemployment rate of 9.4% for Santa Monica. Business Engagement in Sustainability is considered to be highly relevant. We suggest measuring this initially by the percentage of businesses that achieve green business certification, specifically for sectors where a green business certification is available in Santa Monica such as hotels, motels, restaurants, groceries, offices and retail. Once national certification standards are established (anticipated within five years orso), this ED indicator can be converted to trackthe percentage of businesses with national certification. Of the three possible indicators measuring Local Economy, %of Locally Owned Businesses was added; the definition of local business may be found in Chapter 13, "Recommendation 4 ". Indicators Recommended for Removal o Quality Job Creation: Number of New, Relatively High - Paying Jobs was removed because of its lack of measurability. o Income Disparity: %of Santa Monica Households Earning Under $25K and over $100K Annually was removed because the data to measure it comes from the Census, and is updated only every ten years. o Business Reinvestment in Community was removed because of its lack of measurability. Table 41: 5Ummdry of (.Urrent, Aaaed, and Hemovea L:COWMic maJcarors Resource Efficiency Of Ratio of Energy and Water Local Businesses Use to Economic Output of Local Businesses 120 STRATEGY FOR ASUSrA1NABLE LOCAL ECONOMY y� SECTION II: DESIRED OUTCOMES - ectAINvolce StYGtagieS CHAPTER 11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS Maximum %of Economic Economic Diversity Output From Any One Business Sector Business Reinvestment in TBA Community # of jobs /household Jobs /Housing Balance %of Santa Monica residents employed in Santa Monica Living Cost Vs. Household Cost Of Living Income Number of New, Relatively - Quality Job Creation High- Paying Jobs • %of Santa Monica Households Earning Under Income Disparity $25K and over $100K Resource Efficiency Of Ratio of Energy and Water Local Businesses Use to Economic Output of Local Businesses 120 STRATEGY FOR ASUSrA1NABLE LOCAL ECONOMY y� SECTION II: DESIRED OUTCOMES - ectAINvolce StYGtagieS CHAPTER 11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS Local Employment of City %of Municipal Employees _ Staff Who Live in Santa Monica Employment Unemployment Rates Business Engagement in # of Enterprises Adopting Local Economy I si Locally Owned I Businesses Based on the preceding analysis, three indicators should be added and three should be removed from the existing set of ED indicators. The final list of recommended indicators is: 1. Economic Diversity: Maximum % of Economic Output From Any One Business Sector 2. Jobs /Housing Balance 3. Cost Of Living: Living Cost Vs. Household Income 4. Employment: Unemployment Rates 5. Local Employment of City Staff: %of Municipal Employees Who Live in Santa Monica 6. Resource Efficiency Of Local Businesses: Ratio of Energy and Water Use to Economic Output of Local Businesses 7. Business Engagement in Sustainability: # of Enterprises Adopting Green Certification 8. Local Economy: % of Locally Owned Businesses 9. Local Employment of City Staff: % of City Employees Who Live in Santa Monica and Distance City Employees Travel to Work The overall goal behind the changes to Santa Monica's ED indicators was to enable the City to paint a clear picture of the present and future Sustainability situation. SOURCES AND TARGETS FOR NEW ECONOMIC DEVELOPMENT INDICATORS The information derived from interpreting economic indicators is only as good as the data collected. Accordingly, the ED indicators for Santa Monica recommended for addition were selected forthe quality of and ease of acquiring data. 121 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES @AY(I�VO�CC S�Y'Q lC'glL' -s CHAPTER 11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS Table 42 summarizes the data sources and targets for each new recommended indicator. 235 LMID website (2009). Monthly Labor Force Data for Cities and Census Designated Places (CDP) Retrieved June 19th, 2009 from hftp:/An . calmis .ca.gov /fileAfmonthiallsubs.xis: "Methodology:Monthly city and CDP labor force data are derived by multiplying current estimates of county employment and unemployment by the employment and unemployment shares. (ratios) of each city and CDP at the time of the 2000 Census. Ratios for cities of 25,000 or more persons were developed from special tabulations based on household population only from the Bureau of Labor Statistics. For smaller cities and CDP, ratios were calculated from published census data. City and CDP unrounded employment and unemployment are summed to get the labor force. The unemployment rate is calculated by dividing unemployment by the labor force. Then the labor force, employment, and unemployment are rounded. This method assumes that the rates of change in employment and unemployment, since 2000, are exactly the same in each city and CDP as at the county level (i.e., that the shares are sfill accurate). If this assumption is not true for a specific city or CDP, then the estimates for that area may not represent the current economic conditions. Since this assumption is untested, caution should be employed when.using these data." 122 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION II: DESIRED OUTCOMES ecit- —e. StYCIU— 5 CHAPTER 11: REVIEW OF EXISTING ECONOMIC DEVELOPMENT INDICATORS Chapters 7 to 11 of this report have considered what a sustainable local economy in Santa Monica may look like. Describing such an economy began with workshops with stakeholders from Santa Monica to help set out what was desired, and achievable, in Santa Monica. This foundation was used to design a sustainable mix of business types and business sectors that were consistent with the Sustainable City Plan (SCP), the LUCE and the regional and global trends affecting SM's local economy. A series of case studies from elsewhere in the U.S., plus an analysis of sustainability indicators from the City's SCP, were used to recommend approaches for a strong, local and sustainable economy in Santa Monica. Chapter 7 found that stakeholders in Santa Monica identify strongly with 'sustainability while recognizing the need for additional community, business and political efforts to be made fortheir economyto become more sustainable. Specifically, the workshops pointed to a need for an agreed upon definition of sustainable business, for business attraction strategies to target sustainable businesses, and forthe City and community to foster leadership, innovation, and exchange of information to retain sustainable businesses. Further, the workshops confirmed that the City's current sustainability and green programs should be continued and there were a number of ways suggested to improve these programs. Chapter 8 uses the SCP, as well as the analysis in Section I, as a foundation for determining an optimal mix of business sectors in Santa Monica. Global and regional trends shaping the city's development were analyzed and the City's fiscal, social and environmental sustainability was considered in developing a framework of nine principles for determining an optimal mix of business sectors are developed. Chapter 9 takes these principles as a starting point for analyzing business sectors for their impacts, opportunities and contributions to a sustainable Santa Monica. The criteria used to evaluate these sectors are: energy consumption levels, local - serving, paying wages above the MARS, generating high revenues and support for the tourism sector. Results of this comparison support concentrating on attracting and retaining sustainable businesses within the following sectors: • professional, scientific, and technical services • arts, entertainment and recreation • finance and insurance • information • retail trade Chapter 10 establishes the vitality of local economies in advancing a definition of both "local business" and "local economy" from examples of successful local sustainability strategies in other areas of the U.S. (Tacoma, WA; San Benito County, CA; Burlington, VT; Santa Fe, New Mexico) as well as outside the U.S. (United Kingdom, Australia). These studies point to a number of strategies local government can employ to foster sustainability, including: • providing capital • supporting the not - for - profit sector • market research on the local economy • foster' local first" spending by consumers, businesses and government • business incubators and workforce training • creating local revenue streams by leveraging existing sectors • innovation in policy development 123 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY �.r SECTION II: DESIRED OUTCOMES 6QYf l�wirx -s -ct egies CHAPTER 12: SUMMARY OF FINDINGS - SECTION 11 Chapter 11 establishes criteria for designing effective economic development indicators from a sustainability perspective and compares those of Santa Monica to those of five similar American cities. A number of additions and deletions to the existing set of economic development indicators are recommended to improve their effectiveness in measuring the city's progress towards a sustainable local economy. Sustainability is about systems thinking, reaching beyond traditional silos and ways of thinking and doing things differently. The analysis in Section II shows where opportunities for Santa Monica to do things differently are. Moving towards sustainability will have to be mindful of Santa Monica's stakeholders and also consider what is possible with the current mix of businesses and the dynamic global marketplace the city . inhabits. Ultimately, creating a sustainable local economy will go beyond perfecting the mix of sectors or choice of indicators. It will require developing programs, and a mindset, to transform Santa Monica's business community into one where a sustainable way of thinking, collaborating and doing business is part of the everyday business fabric. Building on the principles and insights on findings so far, the chapters in Section III of this report will present a series of recommendations, in effect a roadmap, to help Santa Monica become the sustainable community it seeks to be by developing strategies to attract and retain sustainable businesses, green existing businesses and maximize reinvestment in the local economy. 124 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION Ii: DESIRED OUTCOMES ecerthvoiee -S -ct egies CHAPTER 12: SUMMARY OF FINDINGS- SECTIONII CITY OF SANTA MONICA STRATEGY FORASUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY SECTION III: ROADMAP FOR SLISTAINABILITY This is Section III of a three -part Strategy for a Sustainable Local Economy prepared for the City of Santa Monica. This section builds on the findings, insights and recommendations of the previous two sections to develop a series of recommendations, in effect a road map, to help Santa . Monica become the sustainable community to which it aspires. The strategies focus on how to green existing businesses, attract and retain sustainable businesses and maximize reinvestment in the local economy by both businesses and residents. This report was compiled based on public data including publications, reports, and media coverage and internet sites. While every effort has been made to confirm the validity of supplied facts and figures some inaccuracies may exist. Please report all such corrections to info @eart hvoice.ca. The data in this section is as was available at 29 June, 2009. 125 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY y�rr SECTION III: ROADMAP FOR SUSTAINABIUTV G'QYII�VOiCH s1'rufiegies OBJECTIVES - This chapter provides a synthesis of all previous chapters to make recommendations that provide a roadmap towards a sustainable local economy in Santa Monica. This roadmap is comprised of strategies that address this overall goal by meeting the three principal objectives of this study: • making the city's existing businesses more sustainable • attracting and retaining sustainable businesses to the city • maximizing reinvestment by the city's businesses and residents METHODOLOGY As part of this research, a thorough review of other jurisdictions and existing literature was made. Programs were reviewed and staff were interviewed for details of programming and successes in the above three areas of this study. The cities examined were: • Burlington, Vermont • Chicago, Illinois • Boulder, Colorado Portland, Oregon San Francisco, California Berkeley, California • Los Angeles, California Recommendations developed out of this research were then tested in a workshop held in Santa Monica with stakeholders in the sustainability arena. Representatives were in attendance from: • City of Santa Monica - Office of Sustainability and.the Environment • City of Santa Monica - Housing & Economic Development Department • City of Santa Monica - Economic Development Division • City of Santa Monica - Planning & Community Development Department City of Santa Monica - Solar Santa Monica Program Sustainable Works • Small Business Development Center (SBDC) • Santa Monica Convention & Visitors Bureau (CVB) • Pico Business Improvement District (BID) FRAMEWORK FOR RECOMMENDATIONS The City of Santa Monica aims to develop a coordinated, forward- looking local economic development strategy necessary to maintain an already strong and diverse economy as well as meeting the Citys other economic and sustainability goals 136 The roadmap outlined in this chapter builds on nine general principles articulated in Chapter Eight. These nine principles collectively define the types of businesses that Santa Monica should seekto attract and retain in order to attain its sustainability goals, in addition to suggested amendments to its existing focus and programs. These principles are as follows: 236 City of Santa Monica. (n.d). Request for Proposals: Strategy fora Sustainable Local Economy 126 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECRON III: ROADMAP FOR SUSTAINABILITY CQYII�VO•Ce SfYC•f6g(eS CHAPTER13: RECOMMENDATIONS FORA SUSTAINABLE LOCAL ECONOMY Table 34. Summary of Principles (Reproduced from chapter 8). Focus on attracting sectors that generate high revenues relative to their use of land, including: • Information • Professional, scientific and technical services 1 1 • Accommodation and food services • Arts, entertainment and recreation • Health, social and education services • Retail trade • Finance, insurance, real estate. 2 Give high priority to the retail and accommodation /food industries because of their disproportional importance to the City s fiscal sustainability. Amend the LUCE recommendations with regard to creative industries or local serving 3 office uses to consider financial and insurance companies that serve regional markets as local serving and require all office uses classified as "creative industries or local serving" to meet minimal sustainability standards. 4 To enhance economic sustainability, attract businesses from a mix of different sectors, with diversity within sectors that serve a mixture of local, regional and global markets. Work to maintain the city s balance of large and small firms, and develop different 5 policies to address businesses of different size, and to maximize synergy among businesses of different sizes. Consider "local- serving" businesses those types of businesses that contribute to the 6 dws sense of itself, particularly in the areas of arts /creativity and sustainability, and /or contribute to Santa Monica's uniqueness as a retail and tourist destination. 7 Continue to examine options to increase workforce housing in Santa Monica When targeting businesses for attraction, while taking into account the resource 8 consumption /pollution generation of sectors, focus more on sustainable processes and services rather than green products. 9 Fine tune and focus the criteria used for the Sustainable quality Awards for identifying firms to be targeted for relocation to Santa Monica. The road map also takes into account the impact of the selected sectors listed in principle 1 above on five key measures: revenues (from annual sales, receipts or shipments), business license tax contributions, employee income levels, water consumption and building energy use. These impacts were analyzed in Chapter and summarized in Figure 7 which is reproduced below. 127 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY _ y� SECTION III: ROADMAP FOR SUSTAINABIUTY - e.QrI I�VO� -e StYQtegF @S CHAPTER13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY Figure 7. Comparison of Revenues, Wages and Building Energy latensityin Santa Monica (Reproduced from Chapter 9) Q.1 Revenues' LOW ucatbnal Services Wage High 4FIFIN"and Insurance" ArKEmertaInment, and Recreation weal Estateand Rentalard Using $ W Rd =mmorJatbn SeMces$ Q.3 JPrCfessbna 1. ScamIR4 > uslormatbn"• aidTechnicals"Us$ Heahhcareand Social Assistance Q.2 Reverwes HIGH netaftade$ -Average Income rx#avallablefromcensus2002 data, Income based onthe Cdy of5amaMonla'; Oppottuniaes and Challenrxslaport, pA-0 •" No revenue data available, Plaeemem is based on Census 2002 publishing industry revenues (sub secroo only professonswdh income neededto afford Salta Morin(MARSC 610)areabove x- is ,2o02 census data by sector. Renectstotal sales. receipts orshipmems by sector Legend circlestze is relative to electrical and natural gasmmumptlonrelathe tosalmrecelptsor shipments bysector (2002 EtonomlccensusanclTable 28 and 29), Larger circleim plies high use, mediumclideimphin medium use and small circle implies low use. L is assumed Information and Finance and insurance sectors have slmllarenergyusage patternstothe Prdcssiona4 5ciemlflc and Technical Services sector. $ sectors with hgh business license tar contriGrtions(fiscal 200(YM Circle tone Is rel Wto waterconsumptlonw sales,recelptsor shipments by sector(2002ECerlomlccensus *Imples highwater user,® implies medium water userand Implieslow wateruser. White circle is for sectors with no data available. This chapter takes the above nine principles as a starting point to build a set of recommendations that will serve as a strategic foundation for the City to: attract and retain the businesses identified in Chapter Eight, green existing businesses, and to maximize re- investment and support the growth of the local business. The recommendations are grouped into the following six categories: 1. Sustainability Partnership with Business: Develop a strong long -term sustainability partnership with the private sector. 128 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY e-artl voice strcttegies CHAPTER13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY 2. Sustainability Center: Develop and grow a high profile physical presence in the city, outside City Hall, that offers sustainability- related services and information that can grow to become a hub around which firms offering sustainability- related goods and services might naturally cluster. 3. High Impact Strategies: Work with the private sector to develop and implement sustainability strategies for key sectors with high potential for reducing Santa Monica's ecological footprint. 4. Maximize Local Purchasing: Identify specific opportunities to increase local purchasing and green supply chains, particularly at the retail level, followed by an intensification of "buy local" efforts to plug gaps and promote green purchasing opportunities. 5. Green Commercial Infrastructure: Develop a long -term approach to "greening" new and existing business buildings. 6. Marketing Sustainable Santa Monica: Develop and implement a plan to market Santa Monica to the businesses it seeks to attract. Each recommendation begins with a summary table which lists: • milestone(s) • timeline . • investment • partner(s) • target sector(s) • objective(s): Which of the three principal objectives does this recommendation address: • greening — greening existing businesses • attraction/ retention — attracting /retaining sustainable businesses to Santa Monica • maximizing re- investment — maximizing re- investment by the city's businesses and residents A Gantt chart showing all the recommendations grouped within their categories is provided at the end of this chapter. Table 44 at the end of this chapter compares the recommendations on the basis of their impact on the three principal objectives as well wages, revenue, resource intensity and contribution to city revenues. It also indicates which recommendations are required because they lay the foundation for the others and which are programmatic, meaning that they should be prioritized based on feedback from the business community and other stakeholders. RECOMMENDATION 1: SUSTAINABILITY PARTNERSHIP WITH BUSINESS A sustainable local economy can only be built on a strong on -going partnership between the City of Santa Monica and its business community. This partnership will be based on shared values about the role of sustainability in advancing the prosperity of the community. To date, some progress has been made in developing sustainability partnerships. The business community has been an important part of the Sustainable City Plan's outreach and activities, involved in the Sustainable City Working Group and has made substantial contributions to the Citys LUCE Report. The City and the business community have also partnered on initiatives from the Chamber of Commerce (the Green Business Certification and Sustainable Quality Awards programs), the programs of Sustainable Works, and the Santa Monica Convention & Visitors Bureau. 129 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABIUTY ectr CB StYd *egle'S CHAPTER13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY Collectively these existing partnerships are the foundation for developing the broader partnership with the business community necessary to create a truly sustainable local economy. In developing such an enhanced partnership, the City must face two issues in particular: Much of the City's current activities with the business community have focused on "green" issues, such as reduced resource consumption, ratherthan on the broader concept of sustainability discussed in this report • As documented in Chapter 523', and in a study delivered to the Santa Monica Chamber of Commerce in 2003238, the City has a reputation as one of the least business - friendly jurisdictions in Greater Los Angeles. Both of these issues have to be addressed to engage and attract the private sector and require amore deliberate, sustained effort. The current economic circumstances make this a particularly opportune time to conduct a dialogue with businesses around sustainability issues. The recession, and growing awareness of climate change and its impact on government and business operations, have sensitized both governments and the private sectorto collaboration. Sustainability issues have been a core business concern in Europe forsome years and are now beginning to acquire the same priority for U.S. businesses. Due to the spike in gas prices last summer and to growing concerns about energy security, businesses are now far more aware of sustainability issues than they were onlytwo years ago. The Obama Administration's sustainability- related policies arejust one indication of how far attitudes have changed. Reaching out to businesses would use a two - pronged approach: one for small businesses and one for major corporations. Small businesses, which are far more numerous and which typically have few resources to spare for public policy issues, are best approached through business associations, notably the Chamber of Commerce, the Convention & Visitors Bureau and BIDS. Major corporations, on the other hand, typically devote a significant amount of time to public affairs and have well established corporate social responsibility (CSR) programs. In addition, because of the scale of their operations, these corporations have a far greater potential to impact sustainability in terms of large, capital- intensive sustainability projects. For such corporations an individual approach, possibly initiated at the Mayor, Councillor or City Manager level, may be the best way to begin a dialogue. Starting any serious sustainability dialogue would have to begin with an acknowledgement of the City's reputation as being unfriendly to business, and a pledge to work together with the private sector to address those issues that are perceived as most burdensome to local businesses. It will not be possible to enlist vigorous private sector support for the city's sustainability agenda unless the City is prepared to take action to address the private sector's top -of -mind business climate concerns. Employers that started operations in the city after the Sustainable City Working Group completed its work may have limited awareness of the community's achievements in sustainability, and of its commitment to enhancing sustainability going forward. Employers often publicize details of their CSR programs, which would allow the City to readily identify in advance potential areas of better sustainability- related collaboration with each major corporation in the city. 237 Fine, Howard. (2007). Santa Monica's Dubious Honor: Bayside City Now Countys Costliest for Business LA Business Journal,, Newman, Morris (2003) Commercial Real Estate: RAND vs. Santa Monica: the New Headquarters New York Times, Jan 08 238 Wong, S.; Depaulo, A.; Devore, D.; Rosengart, S.; Scott, D. (2003). Cases in New Venture Management, Comparative Study, City Approval Process for New Businesses, from University of Southern California Master of Business Administration class - 930 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY �arfi. voice sfirAfe.gies CHAPTER13: RECOMMENDATIONS FORA5usrAINABLE LOCAL ECONOMY RECOMMENDATION 1.1: Sustainability Working Group Milestone: First meeting of Sustainability Working Group Timeline: Within four months of City Council approving the program Investment: From within existing budgets Partners: Business community, large employers, BIDS, Chamber, CVB TargetSector(s): All sectors Objectives: Greening, Attracting /Retention and Maximizing reinvestment Immediately following City Council's consideration of this report, the City should engage in informal discussions with each of Santa Monica's major employers as well as its smaller, local firms to begin producing an inventory of issues related to its poor business climate. The discussions would signal the City's willingness to work with local business and would be a starting point for broadeningthe partnership in the future to include the City's sustainability aspirations. Based on the results of these informal discussions, the City and business leaders should form a Sustainable Working Group (SWG). Such a group will provide advice on implementing the recommendations in this report (amended as appropriate) as well as efforts needed to address the inventory of critical business issues. The Working Group's membership would be drawn from city staff and representatives from the private sector, including large employers, local business owners, BIDS, Chamber of Commerce, the CVB and the Santa Monica Daily Press. The SWG should be tasked with implementing the recommendations of this section (i.e. Recommendations 1.1,1.2 and 1.3). It should also recommend priorities for the programmatic recommendations based on the level of interest and degree of collaboration it expects from the business community. Once the SWG has been formed the City should encourage participation from the larger business community through an outreach campaign; the elements of which should include: Individual contact at a senior level with each of top 20 employers in the city by the Mayor, a Councilor or the City Manager • Outreach to businesses, especially those in high impact sectors (identified in Recommendation 3.1 below) through the Chamber of Commerce and appropriate sector•specific business associations (e.g. Convention and Visitors Bureau) • One or more business - focused events (e.g. the City and the Chamber of Commerce co- hosting a half -day seminar to discuss sustainability and the city's business climate) While residents and others may be interested in the campaign, the prime focus should be on the City's partnership with the business community. This focus will include not just forward looking activities, but also recognition of progress to date, by the City, business associations, and individual employers through their CSR 131 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY �.r SECTION III: ROADMAP FOR SUSTAINABIUY - edrli voice Sfl'PtegzeS CHAPTERI3: RECOMMENDATIONS FOR ASUSTAINABLE LOCAL ECONOMY and other activities. All public events in the campaign should, as far as possible, bejointly sponsored by business associations, individual major corporations and the City. The SWG's work should take advantage of work already accomplished by the Business Roundtable, created by the Chamber of Commerce in 2006 to increase communication between Santa Monica's business community and the City. RECOMMENDATION 1.2: Make Recommendations to Improve Business Climate Milestone: Launch of work, completion of first report to City Council Timeline: Launch within five months of City Council approval, report within 12 months Investment., $35,000 (assuming consultant approach) Target Sector(s):. All sectors Objectives: Greening, Attracting /Retention and Maximizing reinvestment Chapters 1 and 5 earlier in this report identified a number of key issues disruptive to the city s business climate. They include: • traffic congestion • housing scarcity stemming from the disproportionate focus on commercial versus residential development • limited social diversity and inclusiveness and challenges to preserve the city's distinctive character in light of development pressures In 2008 the Chamber's Business Roundtable identified the following challenges to doing business in Santa Monica239: • affordable workforce housing • traffic congestion • affordable, quality child care • education and the development of Santa Monica's future workforce • attracting quality employees • availability and cost of office space • healthcare costs • a difficult, lengthy permit - approval process • homelessness • difficulties navigatingthe processes needed to "go green' The 2003 report delivered to the Chamber of Commerce had a number of recommendations for easing the City approval process for new businesses, summarized below: 239 Santa Monica Chamber of Commerce, May 2008 Business Roundtable Newsletter, Retdeved June 27, 2009 from http: //�.smchamber. corn/politimiaction/0508brt.pdf 132 STRATEGY FOR ASUSFAINABLE LOCAL ECONOMY SECrION III: ROADMAP FOR SUSTAINABILITY ear voice. sfirategies CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY • educate the business owner /entrepreneur community on the planning review process and timeline • ensure both the business owner and the planning manager have a mutual understanding of any changes required to the plans prior to approval • emphasize administrative approval to streamline the process • educate residents on the necessity and importance of businesses to Santa Monica's culture and revenue base It is recommended that the work begin by considering the abovementioned challenges and recommendations. It will be critical that the key issues faced by businesses in the city are those identified by the business community itself. This is particularly applicable considering the changing priorities resulting from'the current economic recession. Major employers and developers, business associations and the front -line City staff who deal with businesses should all be canvassed to identify the concerns most often expressed by individual businesses. Where possible, developers of City- approved projects that have not gone ahead, and companies which have chosen not to invest in Santa Monica despite expressing initial interest, should also be canvassed. This work should be guided by the SWG with an approved budget and a clear timeline. The work could be done by a consultant working with City staff, by a committee of local business people working with City staff, or through another approach. The City should establish an on -going monitoring mechanism once the project is complete to measure progress towards improving its business climate. Such a mechanism should be used to adjust policies at minimum once a year. RECOMMENDATION 1.3: Recognize SustainabilityAchievements of Santa Monica Businesses Milestone: Launch of project Timeline: 3 months after creation of SWG (SWG); with completion 6 months after the creation of the SWG. Investment., Could be carried out by staff of SWG members, or consultant for $20,000 TargetSector(s): All sectors Objectives Greening, Attracting /Retention, Maximizing reinvestment This initiative will document and publicize the existing sustainability achievements of Santa Monica businesses, particularly those of major corporations with CSRprogramsZ "D. The purposes of this initiative are three -fold: • to underline the City's intention to work with businesses and celebrate their contributions to sustainability • for the City and SWG to better understand the CSR and other sustainability- related programs of all businesses in the city • to provide valuable new information that might be used in the events recommended forthe outreach campaign identified above, and in the on -going work of the SWG z"o For example, Google, Sony, Yahoo, Viacom (parent of MTV Networks), and Vivendi (parent of Universal Music Group & Activision) all have robust corporate social responsibility programs. 133 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILI Y ear -me st'rott-egies CHARTER13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY Understanding the priorities and existing CSR programs of the city's major corporations will provide an important input for identifying potential synergies among corporations' individual CSR programs, as well as between the objectives of the City and corporate CSR programs. For example, many corporate CSR programs emphasize social sustainability as much as, or more than, environmental sustainability. Since the City has more experience in the environmental side of sustainability, there may be an opportunity for the City and corporations to learn from each other's experience. Of particular relevance maybe corporate views on how the City might work with the business community to improve conditions faced by low wage, long commute workers in the city. RECOMMENDATION 2: SUSrAINABIUTYCENTER As Santa Monica is a relatively small city, a strategy that will create maximum impact is to place all resources for greening business into one location. This creates a consolidated, thriving, highly interactive center for . companies that are involved in sustainability to be attracted to, and that will in turn attract green businesses to one another. It will take time and resources to develop such a center, so a two -stage process is proposed. In the first stage, a "one -stop- shop" for information about sustainability ( "Sustainable Santa Monica Center") would be created. In the second, a large number of community sustainability resources would be co- located to form a Sustainable Business Hub (SBH) that could also become a location for sustainability- related private sector companies to cluster around. RECOMMENDATION 2.1: Sustainable Santa Monica Center (SSMC) Milestone Creation of a strategy for a joint presence Timeline: Within four months of City Council approving the program Investment: Existing Resources, $25K shared space rental, 1 full -time staff Partner(s): Santa Monica College, Sustainable Works, Small Business Development Center Target Sector(s): Businesses in all sectors Objectives: Green existing, Attraction /Retention, Maximizing reinvestment Currently individuals or businesses wanting to meet the City departments and agencies charged with implementing Santa Monica's sustainability efforts must go to multiple locations. The Office of Sustainability and Environment (whose responsibilities include general sustainability, energy and green buildings, water and watershed conservation and hazardous materials) is located on the Pier; the Energy and Green Building office is located on Fifth Street, the Big Blue Bus transit store is on Broadway. The Green Building Resource Center is on Main Street, while Solar Santa Monica is located in the Energy and Green Building Office on Fifth Street. Sustainable works is located in the Center for Environmental and Urban Studies in Santa Monica College, in a renovated center provided at no charge as a donation in -kind, while its community meeting space is elsewhere. Each of these entities having their own premises located throughout Santa Monica provides a broad sustainability presence throughout the city, but is not efficient for either the entities themselves or businesses wishing to access their services 134 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION 111: ROADMAP FOR SITS FAT INABILITY e—co- oiee strategies CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY It is not feasible, or necessarily desirable, to physically move all of these organizations to one location. However, a single location where businesses (and individuals) could access the resources of all the organizations would be highly beneficial and cost effective. A small high profile space could be rented downtown, orthe "one stop shop" could co- locate with the Chamber of Commerce, the SBDC orsome other appropriate organization with ground floor retail space. Regardless of its location, the SSMC would include resource materials and interactive educational displays from all participating organizations. It would be staffed by a full time City public information co- ordinator, trained about all the sustainability programs and able to direct individuals and businesses to the appropriate location forfollow -up. It is also recommended that the City promote the excellent pages on its website where sustainability services and resources are listed, such as the links page at http: / /wwwol.smgov. net /epd /environmental_links.htm. A "one- stop- shop" for information about sustainability would greatly facilitate the process for individuals and businesses to educate themselves and find the appropriate services to worktowards a sustainability shift. Creating a customer friendly service for sustainability will encourage existing businesses to move in that direction and ideally will incite businesses with an interest in sustainability practices to locate in Santa Monica. Furthermore, a "one- stop - shop" would also encourage greater public engagement which should produce direct benefits to local businesses with a sustainability orientation as well as greater support for the City s initiatives to foster a sustainable local economy. RECOMMENDATION 2.2: Sustainable Business Hub Milestone: 1. Approve strategy and incorporate into LUCE., 12 months 2. Sign development agreement: 2 years after strategy is approved 3. Build and move in: 2 years after signed development agreement Timeline: 5 year plan or if capital improvement funds become available when the current economic situation improves Investment: $5 million (order of magnitude estimate only) Partners(s): SBDC, Sustainable Works, private business, Santa Monica College Target Sector(s): All business sectors Objectives: Greening, Attraction /Retention, Maximizing reinvestment The vision for the Sustainable Business Hub (SBH) is to bring together all the sustainability - related resources of the City, the not - for - profit sector and others; to create a thriving hub of expertise where different groups could readily collaborate with one another, and where businesses and individuals could go to have all their sustainability- related services provided. As the SBH became well known, it would also attract private sector providers of sustainability- related services to relocate to the same area, creating a dynamic cluster that could provide services beyond the boundaries of the city. As envisaged, the sustainability information center would be on the ground floor, the City's Office of Sustainability would be on the second floor and partners such as the Green Building Resource Center, Solar Santa Monica, and the Big Blue Bus, Buy Local Santa Monica and Sustainable Works would be on the third floor or elsewhere close by. The building itself should be built or renovated to high sustainability standards, 135 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABIUTY eGrtll+ voice sfiroat-egies CHAPTER13: RECOMMENDATIONS FORA SUSTAINABLE LOCAL ECONOMY providing an opportunity to showcase local and other prowess in green building technology and maintenance. All tenants would share meeting spaces and other resources for maximum efficiency and networking opportunities and leases for not - for - profits might be provided at attractive rates. The process of encouraging private sustainability - related companies to locate around the SBH would be increased if the SBH included an incubator where new green, local businesses could be assisted in growing to theirfull potential, and if the SBH had sufficient space that it could offer local sustainable start -ups graduated lease rates"'. The synergies created by the proximity of the sustainability information centre, the Office of Sustainability and start up businesses would play an important role in attracting new, sustainable businesses to the area, retaining existing businesses that already have a green orsustainable mission and would serve to maximize the reinvestment in the community by utilizing and promoting local, sustainable suppliers and businesses. The high cost of real estate in Santa Monica, and the current economic situation, poses significant barriers to the development of a SBH in the immediate future. But the concept is sufficiently important to the success of a sustainable local'economy in Santa Monica that the City should start now to consider how the concept can fit into its long term land use planning. Having a critical mass of sustainability- related activities, from both the public and private sector, in a single locale provides unmistakable evidence of the City's sustainability prowess to residents and visitors. It will be particularly persuasive to visiting sustainability - related businesses, for which the convenience factor and the implicit evidence of public - private collaboration will be important. City financing of a stand -alone hub is unlikely to be feasible in the foreseeable future, but a SBH might be developed as part of a bigger development. Two concepts in particular may be worth exploring: • Where the City owns land and is considering relatively high density development, it could incorporate the SBH into the development (e.g. an affordable housing or retail development in the airport area). • In areas where the City is contemplating higher densities, it may be possible for the space for SBH to be completely or partially provided by a developer in exchange for permission to develop at higher density 24'. RECOMMENDATION 3: HIGH IMPAcrSTRATEGIES A number of strategies presented in this section work together to engage businesses in sectors targeted for their economic importance ortheir potential for sustainability impacts (primarily in energy and /orwater conservation). Sectors that are deemed critical due to their high impact on Santa Monica's economy are 243 • accommodation & food service • retail trade • information • arts, entertainment and recreation 241 According to David Pascal, San Francisco's Clean Technology and Green Business representative, even if they do not have "official" incubators or clusters per se, the fact that they offer commercial real estate on more flexible terms such as shorter term leases so that early stage companies can grow or contract quickly helps to attract start ups to the City. 242 Vancouver, BC, among many other municipalities in North America has a well established program to allow higher densities in exchange for developer provision of space for community use in developments ens The Education sector is omitted from this list because schools are already involved in a significant project to renovate for energy efficiency and solar installations. The Real Estate and Rental & Leasing sector is omitted from this list because it is specifically targeted by section 5, "Greening Commercial Infrastructure". 136 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY 6.4Yf I'twice s1'rntegies CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY - As illustrated in Figure 7 (see beginning of this chapter), the Accommodation and Food Services is an energy and water intense sector, with low wages and relatively low revenues. For this sector, a reduction in intensity of energy and water use should be the target, along with higher efficiency of resource use in order to increase profits and support higher wages. Retail Trade has relatively low energy consumption, moderate water use and represents a sector where revenues are high and wages are relatively low. For this sector the goal is to reduce water usage and to increase the revenue earning potential via higher profits, similar to the Accommodation and Food Services sector. In contrast, the Information sector has low environmental impacts and represents a sector with relatively high wages and high revenues. This sector has a strong relative position vis -a -vis social and environmental sustainability. An information technology cluster is desirable because of its potential role as a foundational cluster that can attract more of such desirable businesses to Santa Monica. The Arts, Entertainment and Recreation sector is a high energy user, a relatively low water user, and pays high wages despite having relatively low revenues. The goal for this sector would be to form a cluster that aims to become more energy efficient and thereby increase the potential for higher revenues. In each of the above sectors, there is sufficient number of firms with common issues and opportunities, that they can be enrolled, individually or through business associations where these exist, into groups, or clusters, of companies to work together on issues of importance to them. Creating clusters for each high impact sector should be addressed sequentially —start with one cluster and, as the cluster begins to self -direct and needs less assistance from the City, redirect resources to the next cluster process. For each cluster, a three -stage process is anticipated, with each stage building a foundation for the subsequent one. Not all clusters will necessarily go through all stages, since the second and third stages may not be applicable to all sectors. In addition, when the clustering process is working at its best, businesses in it become self - directing, so some self - directing clusters may choose to pursue sustainability objectives in ways not fully anticipated in this report. For each cluster, this three -stage process would start with inviting.interested companies in the sectorto participate in a series of events to learn about best sustainability practices in their sector. The second stage will roll out relevant programs for assessing opportunities for greening and localizing supply chains. The third stage develops a place -based rather than sectoral approach where businesses in different sectors assess their opportunities for sharing best practices, and for working together to reduce resource use and waste. The three recommendations that follow are based on clustering or grouping businesses for maximum impact. The first two recommendations are related to industry clusters, based on business types with common issues and supply chains. The third recommendation is based on grouping businesses in geographic locations to reduce and reuse resources. 137 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY y� SECTION III: ROADMAP FOR SUS AI INABILITY ectr �VO/CE SYYQt6g�@S CHAPTER13: RECOMMENDATIONS FOR ASUSTAINABLE LOCAL ECONOMY RECOMMENDATION 3.1: Cluster Networking (by sector) Milestone: First meeting of members of first cluster Timeline: Start of the three -stage process within six months of program approval Investment: $30,000 per cluster (workshops, co- ordination costs) Partner(s): Chamber of Commerce, Convention & Visitors Bureau, BIDS, and other sector associations as appropriate Target Sector(s): Accommodation & Food Services, Retail Trade, Information and Arts, Entertainment and Recreation Objectives: Greening, Attraction /Retention, Maximizing re- investment When clusters are formed, they should include not just businesses in the sector, but also suppliers of products and services to businesses in that sector. Key customers may also be included. To build attendance at inaugural cluster events, a well recognized sustainability leader in the sector, possibly from outside Santa Monica, might be invited to be present. Subsequent events would feature local firms who are best practice leaders in different aspects of sustainability and workshops and presentations by city experts, sustainability consultants, not- for - profits and other resources. The City might focus initial events on topics like water and energy efficiency, but as each cluster becomes more self - directing, it would choose presenters and workshop topics. Each event would include discussion on the business case for sustainable practices and ways in which the information presented could be used by the cluster, working together, to advance sustainability in the sector. Subgroups or learning circles might be established to address specific issues, or to meet informally to develop priorities or investigate new information. Some groups may choose to establish some form of on -line presence to advance their work. Others might consider opportunities for synergy among members (e.g. sharing tools or other resources) or collaboration to achieve goals such as waste reduction. Industry specific clusters sector could choose to collaborate to investigate national certification for their respective sectors, such as hotels29. and restaurants245. Businesses might reduce certification costs through working together on certification orfrom sharing certification costs with the City. Once national certification programs are in use, existing green business certification programs would become unnecessary, given the strong brand recognition of national and international certifications. Liz Hanson, Business Liaison forthe City of Boulder, Colorado, notes that their city has several successful industry clusters, the strongest being natural and organicfoods. This cluster transitioned from a city task force to an impressive networking not - for - profit organization, with its own board of directors that holds an annual conference drawing people from all overthe world. The cluster has become a model for other industry clusters being developed in Boulder, including "Active Living' and clean -tech industry clusters. 244 Green Seal'" Environmental Leadership Standard for Lodging Properties, 4th Edition. (2008). Retrieved May 10, 2009 , from hftp:/ NAVVY. greenseal .org /resources /GS33_oveNiew.pdf 24 Green Searm Standards and Certification. (n.d.) Retrieved May 10, 2009, from - hltp: /NAnw.greenseal.orgl certification/ gs46 _ food _sentice_operalions.cfm 138 STRATEGY FOR ASUSFAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSFAINABILITY ectir ice sfra #e.gies CHAPTER13: RECOMMENDATIONS FORA SUSTAINABLE LOCAL ECONOMY Human resource issues maybe important for many clusters, particularly as competition for trained resources heats up as the economy moves out of recession. The workforce development success of the tourist industry with the "I am Santa Monica' program could be built upon, as could the program initiated by the White Dog Cafe248 to teach promising employees back office skills. Clusters may also wish to work together on employee retention and attraction, as well as on collaborative training initiatives with Santa Monica College and other possible workforce suppliers. Specific opportunities forthe accommodation and food service sector include: • Santa Monica College and UCLA continuing to enhance their existing hospitality education programs. • Workshops on the social aspects of sustainability focusing on employee attraction, retention and productivity benefits for this sector. • Formulating workforce development programs addressing energy use, water use and living wages. The goal is for clusters to become self- organizing as quickly as possible. After a few meetings, group participants should begin to develop their long run strategy and they should be able to take on full leadership activities within a year to a year and a half from their first meeting. The accommodations sector is a good candidate forthe first cluster to develop as some programs in this sector have already been initiated (e.g. spray nozzles to conserve water). The great diversity of hotels in Santa Monica in size, clientele, corporate structures, and existing CSR programs — suggests excellent opportunities for businesses to learn from one another. It would be worthwhile to explore whetherthe municipalities in the Westside Cities Council of Governments247 would be interested in collaborating on cluster networking given the "porous" nature of the municipal boundaries and to take advantage of regional expertise and possible economies of scale. RECOMMENDATION 3.2: Sustainable Supply Chains (by Sector) Milestone: Stage 1, 2 and 3 reports complete Timeline: Stagel complete 6 months following approval by Council; Stage 2 complete 1 year following; Stage 3 complete 6 months following Investment: $80,000 Partner(s): Target sector businesses TargetSector(s): Accommodation & Food Services, Educational Services, Information, Arts, Entertainment& Recreation Objectives: Greening, Maximizing reinvestment 246 The While Dog Cafe in Philadelphia created a mentoring program that trains with students.from the Restaurant, Hotel and Tourism Academy at West Philadelphia High School, providing opportunities for workplace experience , community service participation, field trips to purveyors and family farms, and recreational and cultural activities. Students learn about the restaurant business and put on a special event in the spring with the help of White Dog Cafe staff. Each year a Culinary Scholarship of $1000 is awarded to a graduate to attend restaurant management or culinary school. Source: htlp:/ /www.whiledog.com/community.html 247 The Westside Cities Council of Governments (COG) joint powers authority is a voluntary, cooperative effort among the cities to forge consensus on policies and programs of regional significance. It brings together Beverly Hills, Culver City, Los Angeles, Santa Monica, West Hollywood and the County of Los Angeles. 139 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILffY aari�.voirx stra- f'eyies CHAPTER13: RECOMMENDATIONS FOR ASUSTAINABLE LOCAL ECONOMY Sustainability purchasing can be defined as purchasing greener or more ethically sourced products and services. It has many demonstrated environmental and social benefits, from reduced use of materials and reduced pollution, to strengthening fair and sustainable labor practices. Addressing the Sustainability of supply chains for major Santa Monica purchasers means maximizing not only these benefits, but also provides an opportunity to assess and plug leakage from the local economy (see Recommendation 4.2 for more on leakage), which in turn will help to identify opportunities for existing or new local or regional sustainable businesses to plug these leaks. In addition, economies of scale afforded by networking clusters can also help to . facilitate bulk purchasing of sustainable products and services such as cleaners, paper, packaging and supplies. Sustainable supply chain work offers Santa Monica the opportunity to lead the nation in fostering sustainable supply chains, as work of this nature to our knowledge has not been completed elsewhere. City leadership can provide direct benefits to businesses and position Santa Monica as a mentor to other municipalities that choose to follow its lead: The following three stages are recommended for the roll -out of a program to foster sustainable supply chains Stage 1: catalogue sustainable supply chain activities currently underway in Santa Monica Stage 2: identify and engage a group of major purchasers to analyze spending opportunities Stage 3': review market opportunities for matching supply and demand in the local and regional marketplace The first stage will catalogue the many green supply chain activities currently underway in Santa Monica. In order to gather best practices, success stories, and address challenges to fostering sustainable supply chains, research and interviews will be conducted with the City, Google, the Santa Monica School District and others who have shown leadership in this area. This knowledge base will create an understanding of the local marketplace for sustainable products and services, issues to overcome and points of leverage. In the second stage, the program will identify and engage a group of major purchasers including the City's procurement staff, hotels, businesses in the creative and information sectors, restaurants, universities and others to analyze spending for opportunities to foster sustainable supply chains. These opportunities may include purchasing green orfair -trade products, buying from local suppliers, amalgamating purchasing power among many purchasers, working with suppliers to create innovative new products, and other strategies. The third stage will build on the findings from Stages 1 and 2 by reviewing market opportunities for matching supply and demand in the local and regional marketplace. Market opportunities may include identifying existing suppliers to meet demand, providing market research on demand to incubate new local business, or identifying forward- looking suppliers to collaborate with on new product or service innovations. As part of this program, efforts to foster sustainable supply chains will also work on maintaining opportunities for small local businesses to bid for contracts from large purchasers, since consolidating demand sometimes pushes smaller suppliers out of the market. The main thrust of Stage 3 will be to provide market research on demand to potential local businesses. This market research is often out of reach for small business due to the cost of the investigation, and thus can provide a valuable resource for existing local businesses looking to expand, or small businesses in the development phase. Once again, it would be worthwhile to explore whether there was interest within the Westside Cities Council of Governments in collaboration on sustainable supply chains on a regional basis. 140 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY ecar#�voice s�'ra'( -egies CHAPTER13: RECOMMENDATIONS FORASUSTAINABLE LOCAL ECONOMY RECOMMENDATION 33: Business Ecology Networks (by Location) Milestone: Business ecology networking study complete in pilot BID Timeline: 6 months following approval by council Investment: $5,000 scoping by City staff, $25,000 per BID Partner(s): BIDS, Chamber of Commerce Target5ector(s): All Objectives: Greening, Attraction /Retention, Maximizing reinvestment Business ecology networks take a systems approach to businesses in a geographical area, seeing them as part of an integrated ecosystem, where waste by- products from one business may become valuable resources for other businesses. By cultivating relationships between businesses, opportunities emerge for them to collaborate on projects to reduce the overall footprint of the ecosystem. These projects typically reduce resource inputs and pollution outputs by encouraging businesses to share resources, to collaborate on group . audits or group green purchasing, or to capture the outputs of one business and reuse them as inputs of another. Business ecology networks have the potential to reduce resource use and discharges in Santa Monica. The opportunity for waste exchange, where the output of one business becomes the input for another, works well in industrial parks, but is less feasible in commercial areas where both wastes and inputs have a high likelihood of being similarto neighbouring businesses. However, small -scale projects, like those within a downtown core or community town centre have been identified and include 211: • joint performance (eco- efficiency) audits • joint and /or shared logistics; training and green marketing • shared infrastructure e.g. rainwater capture • downtown employee trip reduction programs • small business engagement in assets mapping • green procurement policy for downtown businesses • targeted 'green' economic development • nodes of recycling / remanufacturing activity • by- product synergies • communication and online information exchanges Since the availability of potable water is a key resource issue in Santa Monica, business ecology networks could begin by identifying existing water discharges with the potential for capture and reuse in neighbouring businesses. Wastewater could also be captured, treated and stored in cisterns for public space irrigation. Beginning with one BID, with the goal of expanding out to all the BIDS, the project will assess major resource users and uses, waste and sewer outputs so as to identify major opportunities for waste exchange, input reduction, and business collaboration. 248 Eco Industrial Solutions Inc. (2005). Smart Growth on the Ground. Foundation Research Bulletin: Squamish. No. 7 Retrieved April 21, 2009, from http: / Neu .sgog.be.catuplo /Sg7Ecoind.pdf - 149 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY 6QY11'�VO�Ce StYRt8gl4'S - CHAPTER13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY - If wastewater re -use is selected, the City should work with a consultant and City staff to assess the best BID for a pilot, based on the location of the city's largest water users and wastewater dischargers, and the expected high quality of the wastewater discharged. Following this initial scoping, a BID will be chosen to pilot the business ecology network approach. RECOMMENDATION 4: MAXIMIZE LOCAL PURCHASING All businesses in Santa Monica contribute to the economy and to the City s tax revenues. But businesses that have a strong relationship with the city - "local" businesses - add more to the economy, because greater shares of the revenues they generate tend to stay within the community. As discussed in Chapter 10, local purchasing contributes to greater circulation of wealth in a local economy, a phenomenon known as the "multiplier effect ". Money spent with local businesses circulates in the local economy 2 -5 times compared to spending at chain or franchised businesses. It therefore makes sense for the City to pay particular attention to strengthening local businesses. Defining a "local' business is difficult; drawing on the definition used by the Business Alliance for Local Living Economies ( BALLE) and many BALLE networks throughout the U.S., and on advice from the Santa Monica Office of Sustainability & the Environment, as well as other City departments, the recommended criteria for qualifying as a "local" business for the purposes of this section are: • privately held companies (not publicly traded) 51% of business ownership live in the LA County region • the business pays all of its own marketing, rent and other business expenses (without assistance from a corporate headquarters outside the LA County region) • the business can make independent decisions regarding business practices, purchasing and distribution choices, its name, look and feel • the business is registered in California, with no corporate or national headquarters outside of the LA region All references to "local business ", "local retailer", "local purchasing ", and "local economy" in this section refer to business that meet the above criteria. References to Santa Monica's sustainable local economy refer to the broader goals and recommendations of this report, which include Santa Monica's many businesses. RECOMMENDATION 4.1: Create a Local Business Baseline Milestone: Completion of local business baseline Timeline: 6 months following approval by City Council Investment: $20,000 Partner(s): TBID TargetSector(s): All Objectives: None —lays the foundation for other recommendations A local business baseline will create a snapshot of the city's local business component, allowing the City to measure how "local" the economy is. This data will allow the City to set future targets, and to measure the effectiveness of various strategies employed to foster and retain local business. 142 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY yr SECTION III: ROADMAP FOR SU57AINABIUTY gctY[I�V01Ce StYptelj�ES CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY Cities like Santa Fe and Tacoma have produced baseline studies to measure the share of local businesses in their economies. They use the baseline to measure whether the local share of their economy is growing or falling, and to assess the effect of various policies on local business. The Santa Fe Independent Business Alliance found that independent businesses comprised a large portion of their economy; between 1998 and 2003 the number of non -local retail businesses in Santa Fe grew at more than double the rate of local retailers 149 Current City business licenses offer details about business ownership that can help to form a local business baseline. This can be achieved by comparing City business registrations with the criteria for local business mentioned previously. City staff could do this work if resources were made available, but other cities — Santa Fe for instance— have hired outside consultants250. RECOMMENDATION 4.2: Assess Retail Leakage Milestone: Consultant report outlining retail leakage Timeline: 6 months Investment: $50,000 Partner(s): TBD Target5ector(s): Retail Trade Objectives: Attraction /Retention, Maximizing reinvestment Retail sales "leakage" is the amount Santa Monica residents spend on retail products outside the city. Significant retail leakage affects both Santa Monica's local businesses and its sales tax revenue. In 2007, as part of the Land Use and Circulation Element (LUCE) process, a preliminary leakage analysis was performed to compare sales revenues to projected demand. This work identified several poorly performing sectors: 1. General Merchandise /Department Stores, providing clothing, furniture and appliances, represent a 28% loss in potential sales. 2. Drug Stores, providing pharmacy services and toiletries, represent a 37% loss in potential sales. 3. Service Stations, providing gas and sundries, represent a 71% loss in potential sales. This initial LUCE leakage analysis identified over $200 million in retail leakage from the city. To identify opportunities for plugging retail leakage further study is required to understand the shopping patterns of residents, commuters, daytime visitors and tourists. An in -depth leakage analysis would go beyond the LUCE analysis that used national averages to estimate spending. It should also assess the potential impact on leakage and location of a sustainable retail center (proposed in Recommendation 4.5). The retail leakage study will help develop the City's understanding of retail sales that are being made outside Santa Monica and the realistic potential for capturing these sales in various retail categories. 249 New Rules: The Hometown Advantage. (2004). Santa Fe Alliance Releases Independent Business Study. Retrieved November 18, 2008. from www.newrules.org /retaiUnews_ archive .php ?browseby = slug &slugid =215 250 New Rules Project. (2004). City of Santa Fe Releases Independent Business Study. Retdeved April 21, 2009 from http: /Av .newrules.org /retail /news /santa -fe- alliance - releases- independent- business -study - 143 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY earf�voirx stral -egies CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY RECOMMENDATION 43: Plug Retail Leaks Milestone: Plan for plugging leakage Timeline: 1.5 years Investment: Existing resources Partner(s): Small Business Development Center, Retail Trade Cluster, Business Improvement Districts, Chamber of Commerce Target Sector(s): Retail Trade Objectives: Attraction /Retention, Maximizing Re- investment Following the determination of retail leakage in Recommendation 4.2, the information could be used to engage existing local retailers, to build trust and explore the potential for local businesses to meet retail demand. The City should communicate its interest in plugging retail leaks without infringing on the sales potential of existing local retailers by fostering local business capacity and entrepreneurs rather than attracting competing retailers from outside the Santa Monica region. In this way, the City can promote the economic multiplier of local business and capture retail sales tax from spending within Santa Monica. If there is not interest from within Santa Monica, the City can then work to attract regional businesses to plug these leaks, working to capture retail sales tax from new Santa Monica businesses. The focus should be on first ensuring that existing business owners are first made aware of the opportunities and supported in working to plug the leaks, so as to foster local business and prevent undue competition with existing businesses. The City can build on the relationships created in the cluster work in orderto assess the opportunities to encourage existing businesses and foster new sustainable, local retailers. Information from Recommendation 4.2 can be promoted through entrepreneurship and business development programs (Santa Monica Small Business Development Center), the Retail Trade Cluster created in 3.1, the Business Improvement Districts and the Chamber of Commerce. RECOMMENDATION 4.4: Expand "Buy Local "campaign Milestone: Completion of existing campaign revision Timeline: 6 months following completion of local business baseline (from Recommendation 4.1) Investment: Use existing SM City resources Partner(s): TBD Target Sector(s): All business sectors and consumers Objectives: Attraction /Retention, Maximizing Reinvestment "Buy Local" marketing campaigns aim to educate consumers and business purchasers about the benefits of local spending and to increase local spending and its associated positive impacts on the local economy. In 144 STRATEGY FOR A5USTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY 6PY� VOiCe. SfiYQt @��65 CHAPTERI3: RECOMMENDATIONS FOR ASUSTAINABLE LOCAL ECONOMY Bellingham, WA, a "Buy Local" campaign has influenced consumer spending so that 58% of residents claim to be "more deliberate about choosing local, independently owned businesses first" than before the campaign began. The campaign has also influenced local business spending by other local businesses, with businesses claiming a 50% increase in the amount of local purchasing."' Building on the initial success of the City of Santa Monica's Buy Local campaign, an expanded campaign will focus marketing efforts more squarely on local businesses as defined by the criteria established and the local business baseline developed by Recommendation 4.1. Focusing the buy local campaign on local businesses helps support them in the area of marketing; an area of business they can rarely afford, and so require support to compete effectively against other retailers. The campaign should include local business engagement, so that local businesses themselves begin to feel ownership of the campaign and have an increased awareness over the impact of their own purchasing power. Given the City's interest in retaining sales tax dollars, the campaign can secondarily suggest shopping with businesses located in Santa Monica, with a clear explanation of the benefits of purchasing with local businesses and businesses located in Santa Monica business. The next step would be to expand the campaign to include business -to- business local purchasing opportunities. This will be accomplished in conjunction with otherstrategies focused on greening high impact sectors developed in Recommendation 3.1 (forming business clusters) and Recommendation 3.2 (greening supply chains). RECOMMENDATION 4.5: Sustainable Retail Center Milestone: Stage 1- Issuing RFP; Stage 2 — Complete evaluation of RFP responses Timeline: Stage 1: 6 months; Stage 2: 6 months Investment: $25,000 Partner(s): Santa Monica Redevelopment Agency Target Sector(s): Retail Trade, Real Estate & Rentals Objectives: Greening, Attraction /Retention, Maximizing Re- investment ' As discussed above, retail sales leakage is estimated to be over $200 million. The total sales tax rate is currently 9.25 %; the City's sales tax rate is 1% meaning that a $200M retail sales leakage translates into $2 million in lost tax revenues for the City. This leakage is concentrated in the General Merchandise /Department Store and Drugstore sub - sectors. This leakage is likely the result of two factors: Santa Monica residents who work and shop outside the city and residents going outside of the city to shop at large format, high volume retail stores such as Costco, Best Buy and Target. The latter not only has negative financial implications for the City and for local retailers, but also contributes to traffic congestion and pollution. Historically, opposition to locating large format, high volume retail stores in Santa Monica has been driven primarily by concerns about increasing automobile traffic and congestion. In reality, residents driving to and from Santa Monica to shop at such stores is contributing to congestion and creating leaks in the local economy. Additionally, opposition to large format, high volume retail stores has been motivated by their negative impact on local businesses. 251 Sustainable Connections. (2006). Study Shows 58% of Local Citizens are'Thinking Local First' More Often. Retrieved Apnl 21, 2009 from hUp:/f vr, vw. sustainableconnections .org /thinkloc [fTLFStudy/ Results% 20of %20poll %20of%2OTLF %20!mpact.pdf 145 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY .rr SECTION III: ROADMAP FOR SUSTAINABILITY e-etr VOA _e StKOtteg�eS CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY It is therefore recommended that the City develop an RFP for a sustainable retail center guided by the consultation with local retailers and the findings of the leakage study proposed under Recommendation 4.2. It is possible that the results of the consultation and study might lead to the conclusion that overall a sustainable retail center would not be advantageous. This will have to be carefully assessed once this work has been done. The potential impact of a sustainable retail center on plugging existing retail leaks should be examined as part of any leakage study. A sustainable retail center would be anchored by a large format, high volume retailer. It would offer Santa Monica residents and individuals commuting to work in Santa Monica a local option for shopping in the General Merchandise /Department Store & Drugstore retail categories. It could also offer lower price options for lower income residents. Such a center could be developed on City land if an appropriate parcel could be made available or on private property in partnership with a developer; for example, the Santa Monica Circuit City store was shut down recently creating the possibility of redeveloping that land. It is suggested that the footprint be minimized by looking at multiple story, infill solutions accommodating multiple uses. Development permission would be tied to a package of sustainability commitments such as a green building (LEED Gold or better), local hiring, paying staff a living wage and creating workforce housing. It is suggested that the L.A. Live Community Benefits Program agreement... be used as a model for integrating sustainability into large scale development agreements253. In order that the sustainable retail center mitigates potential negative impacts on local businesses and maximizes local purchasing, it should include commercial space for local retailers who could benefit from the traffic created by the anchor. This should be evaluated in Recommendation 4.3 as one of the possible opportunities for encouraging existing and fostering new local retailers. This project would commence upon completion of Recommendation 4.3. The work would proceed in two stages. Stage 1 would consist of developing the RFP where it would be useful to have the services of an external consultant to assist with developing the RFP. Stage 2 would consist of evaluating the responses to the RFP where the work would be undertaken by the City departments concerned with such a project. In the event the RFP process yields an attractive and viable proposal of interest to the City, then further work would be required to plan and negotiate with.the successful proponent. The exact scope and nature of that work would have to be assessed at that time. The Santa Monica Redevelopment Agency would be a good partnerfor this project and could draw upon their successful experience with the downtown redevelopment project comprising Santa Monica Place and the adjoining parking structures. RECOMMENDATIONS: GREEN COMMERCIAL INFRASTRUCTURE Santa Monica's building stock presents a major sustainability challenge; buildings accountfor approximately 30% of the city s greenhouse gas emissions. To reach its sustainability targets, the City needs to engage and incent building owners to update the systems for energy efficiency in buildings. The Chamber of Commerce has advocated such green business incentives, calling for legislation that would provide incentives for businesses and developers to make their operations, especially new construction, energy and resource efficient. Many of the costs of making buildings more sustainable, whether by minimizing water use, providing energy retrofits, or adding solar heating are significant and have multi -year payback periods with significant upfront 252 L.A. Live Community Benefits Program, Status Update. (2006). Retrieved April 21, 2009, from httap� : // .edf.org/ documents /5196_ LALive_CBAupdate.pdf 25 The L.A. Live agreement includes provisions relating to a living wage incentive, local hiring and job training, and affordable housing. 146 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY y� SECTION III: ROADMAP FOR SUSTAINABILITY - @QYl►�VO�Ce Sftpf6glE'S CHAPTER13: RECOMMENDATIONS FOR ASUSTAINABLE LOCAL ECONOMY costs. Businesses and residents alike find it difficult to make appropriate investments in making buildings more sustainable because they wish to safeguard their cash flow, particularly in the current environment. In addition, the long payback periods typically associated with these retrofits create uncertainty as to whether the owner will own the building long enough to recoup the upfront investment through operating cost savings. Local governments that raise property taxes are well positioned administratively to provide loans and recover payments over a period of years through the property tax system. Delinquencies can be dealt within the same way that property tax delinquencies are recovered. Many municipalities use this mechanism to fund capital expenditures that directly affect certain property, owners (e.g. local improvement charges to fund the provision of sidewalks), and California Bill AB -811 allows the mechanism to be used for solar power and other efficiency improvements made on their own properties by homeowners and small businesses. It is recommended that the City look closely at taking advantage of AB -811 to encourage solar power and energy efficiency investments. RECOMMENDATION 5.1: Building Energy Retrofits . Milestone: Retrofit upon sale ordinance approved by City Council Timeline: 1 year after City Council approving the program Investment: Use existing SM City resources Partner(s): Santa Monica College TargetSector(s): All Objectives: Greening, Maximizing re- investment The Building Energy Retrofit Program aims to reduce energy use in commercial buildings by improving efficiency of the building envelope and its systems. In orderto improve building energy efficiency, the program would implement an efficiency retrofit upon sale ordinance for commercial properties, building on the precedent of the City of Santa Monica's ordinance to retrofit buildings upon sale for water efficiency. In Burlington, Vermont, a building energy retrofit upon sale requirement provides a successful example for residential properties. City of Santa Monica staff in the Energy and Green Building Program could determine the efficiency levels required upon sale. In establishing the required efficiency level, it is recommended that payback periods and the availability of financing be among the factors taken into consideration. Once economic conditions improve, the City may wish to consider creating a loan program to provide commercial property owners with the capital to make energy retrofits. These loans would be paid back with money saved by reduced operating costs for energy similar in structure to the proposed solar financing loan program. Although currently it is illegal to place a lien against a property to pay for such retrofits, it is likely that this may change at some point in the future. This strategy should be considered should the legislation change. In the meantime, the Building Operators and Managers Association (BOMA) is working with Energy Service Companies (ESCOs) to set up a similar system. The ESCOs loan the capital and are repaid through energy savings. In this system, the assets in the building are used to secure the loans. BOMA has worked with the 947 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY - SECTION III: ROADMAP FOR SUSTAINABILITY eUrti .voice StYQteyies CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY Clinton Climate Initiative to complete a pilot project to create model contract language to help reduce the time and cost associated with commercial retrofits 254 The Building Energy Retrofit Program will create spin -off green collar jobs, as the market responds to the opportunities presented by increased demand for building energy retrofit services. The City may wish to pre- screen these companies in the same way that the SSM program has pre- screened solar installers. The City could collaborate with Santa Monica College's green jobs program to ensure that the City maximizes this economic opportunity in order to foster start -up businesses and new locations of regional businesses in the city. The College's programs could potentially be expanded to working professionals, providing electricians, lighting sales professionals and others with the knowledge to broaden the market and deepen the cty s expertise in this area. RECOMMENDATION 5.2: Solar Grant Milestone: Following decisions on allowing net metering for multi - metered buildings and an increase in California's feed -in tariff,* Pilot program commits $500,000 in funding /incentives to commercial solar installations Timeline: 2 years following milestone Investment., $500,000 from grants and stimulus funds Partner(s): Solar Santa Monica, The Energy Coalition, Apartment Association of Greater Los Angeles: (AAGLA) TargetSector(s): All Objectives: Greening, Attraction /Retention, Maximizing Re- investment A solar grant program is necessary in order to accelerate uptake of solar power in commercial buildings. The city of Santa Monica has been investigating solar financing options for several years; the lack of attractive financing options for commercial installations has been identified as a major obstacle by the City's Solar Santa Monica (SSM) program. This is in part due to the fact that financial viability of larger commercial installations is weakened by the state's net metering rules and rates for feed -in tariff. The City of Santa Monica is currently working to affect a change in both net metering requirements and the current rate for the feed -in tariff. It is recommended that the implementation of this strategy follow decisions on these two critical elements that affect the business case for solar installations for commercial property owners. The City's Solar Santa Monica program provides residential and commercial building owners with various services including a free assessment of potential for solar generation, approval of solar contractors, and financing arrangements. To supplement this program, commercial building owners require financing that substantially reduces the initial capital costs for solar installations. The solar financing program proposed here has a goal of 50 commercial installations of up to $10,000 each. It would help to build Santa Monica's brand as a sustainable city by helping to create tangible, visible signs of the City's work towards leadership in energy 254 FacilifiesNet. 2008. Boma And Clinton Climate Initiative Announce Model Contract For Escos, Commercial Real Estate. Accessed June 18, 2009 from http:/Awrw.facil!Uesnet.coMgreentarticleBOMA- and - Clinton - Climate - Initiative - Announce - Model- Contract - for- ESCOs- Commerciai -Real- Estate - -9088 148 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUS FAINABIUTY ec.rt�. voice strat -egies CHAPTER13: RECOMMENDATIONS FORA SUSTAINABLE LOCAL ECONOMY independence. The program would also reduce greenhouse gases from the commercial sector, which dominates Santa Monica's energy consumption (49% in 2006).255 The grant program will also help the City meet its goals for: 25% renewable energy zero net energy by 2020 greenhouse gas reductions of 30% below 1990 levels by 2015 for municipal operations and 15% below 1990 levels by 2015 for the community It is recommended that the City seekgrants and stimulus fund to provide the $500,000 in funding suggested forthis program. The current financing options forthe City s SSM program have not proved attractive to commercial building owners, likely due to the fact that if owners were so inclined, they could arrange financing for a similar or reduced rate to the financing options offered by SSM. Allowing fundingfor solar installation to delay the full amount of capital costs and amortize them over 20 years allows property owners to pay forthe loan out of energy savings that are charged back against the property and recovered by the Cityfrom the current building owner against local improvement charges. The City of Berkeley's solarfinancing plan accomplishes this by covering the capital cost forthe solar system and its installation, paying forthe system through an assessment to the property owner's tax bill. The tax stays with the property even if sold, and the solar system remains with the property."' The program has committed funding to 38 solar installations in its pilot phase. The Environmental Protection Agency granted Berkeley $160,000 to cover some of the legal, accounting and staff costs associated with the financing plan. The Solar Financing Program will create green collarjobs, as the market responds to the opportunities presented by increased demand for solar installation services. The City should collaborate with Santa Monica College's green jobs program to ensure that the City maximizes this economic opportunity in orderto foster start -up businesses and new locations of regional businesses in the city.257 The City of San Francisco implemented a solar incentive rebate program in 2008, drawing businesses and green jobs in solar installations and service to the area, such as SolarCity, Akeena Solar and Borrego Solar.25B 255 City of Santa Monica. (2006). Sustainable City Progress Report. Retrieved May 20, 2009, from httg: //wkwv01. smgov. neYepd/ scpr/ ResourceConservationlRC3 _EnergyUse.htm 25 SF Gate. (2007). Berkeley Going Solar.., City Pays Upfront, Recoups Over 20 Years. Retrieved on April 28, 2009, from hllr: //ww .sfgate.condegi- bin /arficle.cgi ?f= /rJa /2007 /10 /26 /MNAiTODQO.DTL &tsp =1 25 There are a variety of classes on green collar jobs, such as energy retrofit and solar Installation currently offered at Santa Monica College. Students Include laid off construction workers. A partnership with the City to extend these classes to working professionals such as electricians for energy retrofit and to broaden their marketing of them to the general public would help in creating local expertise in these areas. 258 Sustainable Industries Journal. (2008). California: The Accidental Cleantech Capital? Retrieved April 23, 2009, from www. sustainableindustries. wmlgreenmarketing /22712709.html ?viewAll =y 949 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY y� SEC ION III: ROADMAP FOR SUSTAINABILITY eQY.vo�Ce s1- rat"egivs CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY RECOMMENDATION 5.3: Downtown Energy Efficiency Milestone: Stage 1: First meeting of downtown energy efficiency task force Stage 2: Identification of projects Stage 3: Long -term energy plan and financing strategy Timeline: Stage 1- 3 months; Stage 2 — 6 months; Stage 3 — 6 months Investment: Stages 1 and 2 -from within existing budgets by using existing City staff resources; Stage 3 - $50,000 for the development of the long -term energy plan and financing strategy for the downtown district Partner(s): Bayside District Corporation, Macerich Corporation, NHS Properties, Santa Monica RedevelopmentAgency, Southern California Edison TargetSector(s): Retail Trade, Real Estate & Rentals Objectives: Greening, Maximizing Re- investment District energy planning aims at identifying land use planning, transportation, energy supply, site planning, building design and infrastructure strategies and policies that encourage energy efficiency, innovation and conservation. These policies and strategies aim to: • encourage the planning, design and construction of energy efficient neighborhoods and buildings • encourage reductions in energy consumption and costs • improve community livability by reducing local sources of pollution by reducing the need for automobile use and energy consumption and increasing the use of clean energy alternatives • foster the development of new energy supply options Land use and transportation planning have recently been comprehensively examined in the LUCE. A district energy plan would be a logical complementto the land use and transportation plan put forward in the LUCE. The City has been interested in the potential for a district energy system forthe downtown for many years and has in fact carried out a number of feasibility studies overthe last decade. The most recent study was completed 3 years ago by ASW Engineering. To date it has not been possible to identify a solution with a ' viable business case given the current density and available technologies. However, there is an opportunityto identify potential projects around peak shaving259, demand response and energy efficiency. Potential partners could include: • Bayside District Corporation • Macerich Corporation (owners of Santa Monica Place) • NHS Properties (a major residential multiple dwelling unit property owner) • Santa Monica. Redevelopment Agency • Southern California Edison 259 Peak shaving" is the reduction of the amount of electricity or natural gas drawn from a utility during utility- designated peak time periods. 150 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSFAINABILITY ec•YVO�Ce strategies CHAPTER13: RECOMMENDATIONS FORA SUSTAINABLE LOCAL ECONOMY The downtown would be defined as the area between Wilshire Boulevard on the North, Lincoln Boulevard on the East, Pico Boulevard on the South and Ocean Avenue on the West. It includes the Third Street Promenade, many of Santa Monica's restaurants and larger hotels and a large number of civic buildings such as City Hall, Police Headquarters, LA County Courthouse, the Civic Auditorium and Santa Monica High School. It is recommended that the Downtown Energy Efficiency Initiative have 3 stages: Stage 1: create a downtown energy efficiency task force and convene the initial meeting Stage 2: identify potential projects around peak shaving, demand response and energy efficiency that would take advantage of existing programs from the electricity and gas utilities serving Santa Monica Stage 3: once the economic climate has improved, look at new projects requiring capital investment, such as a major solar panel deployment or a district cooling system based on geo- exchange with the ocean. A long -term energy plan and financing strategy for the downtown district should be developed as part of phase 3. RECOMMENDATION 6: MARKETING SUSTAINABLE SANTA MONICA Santa Monica's unique location and high standard of living has meant attracting businesses to locate there and tourists to visit has been a relatively easy sell. It has also meant that, other than the programs of the Convention and Visitors Bureau (CVB), the City has limited experience marketing itself. Two types of marketing strategies will need to be developed: marketing to business and marketing to visitors. Marketing the city as a business destination is different from marketing it as a tourist destination. Though there may be some synergies between the two types of marketing, they often work at cross purposes in destinations like Santa Monica. Tourist marketing is primarily about presenting the city as a leisure and beach location while business marketing is primarily about presenting the city as a thriving place to interact with . other businesses, to find productive employees and a business - friendly environment. Some of the targets for both types of marketing will be the same, so the two approaches have to be compatible, which requires significant marketing expertise. The recommendations for the marketing efforts reflect these challenges and are broken down into the following two marketing campaigns. RECOMMENDATION 6.1: Attract Appropriate Businesses (Market To Businesses) Milestone: Step 1: SWG has been formed and necessary partnerships with business have been developed Step 2: preparation of marketing plan and materials and launch Timeline: Step 1: One year after report recommendations are approved Step 2: Two years after report recommendations are approved Investment: From existing funds; $100,000 (possibly cost shared); one additional senior employee (possibly cast shared) Partner(s): Chamber, realtors, most successful clusters, SMC, Sustainability Center TargetSector(s): All Objectives: Attraction /Retention Once the work of the SWG (from Recommendation 1.1) has begun and improvements to the business climate are underway the City will need a focused and concerted effort to market Santa Monica as an attractive locale 151 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY eOrYII'•VOiCe s1'rat"egies CHAPTERI3: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY for business and investment. The sectors identified in Chapter Eight as having high revenue to land use ratios as well as those sectors critical to making a sustainability shift in Santa Monica should be the focus of such a marketing campaign. These sectors are: Information; Professional, Scientific and Technical Services; Accommodation and Food Services; Arts, Entertainment and Recreation; Health, Social and Education Services; Retail; and Finance, Insurance and Real Estate. It is recommended that an economic development consultancy be hired through an RFP process to develop an appropriate marketing program approximately two years after adoption of this report's recommendations. The campaign would be an important mechanism to bring sustainability- related companies to Santa Monica and to reinforce Santa Monica's "green" brand in the U.S. business community. The following are key factors in developing the campaign: • research on local and comparator costs, Santa Monica's advantages, locations available /under development /developable • development of sustainability -based unique selling proposition for the city • outreach to the local business community to confirm messaging • partnership with the local commercial realtor community for collaboration, ongoing information on vacancies, real estate pricing, etc • analysis of target companies, not - for - profits and entrepreneurs consistent with Chapter Eight criteria, and of cost effective ways to reach out to them • development of high quality print materials, which could include a map and listing of Santa Monica based, sustainability- related companies, etc • development of appropriate web -based materials • outgoing and incoming missions contracts with relocation experts videos and social marketing on the internet It should be emphasized that marketing the city as a business destination will not be effective until there is perceived change in the business climate. Businesses motivated to consider the city as a business location thanks to a marketing campaign normally start their due diligence by consulting peer business people in locations under consideration. Reports of a jurisdiction unwelcoming of business will immediately counter any positive messages from marketing. Through the efforts and partnerships stemming from the SWG, local businesses can play an important role in reinforcing the City's marketing to business. 152 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABIUTY ec•r�. voice sfraf"egies CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY RECOMMENDATION 6.2: Attract Sustainability- Minded Visitors (Market To Visitors) Milestone: Step 1: Create plan; Step 2: Implement plan; Step 3: Add additional sustainability- related conferences; Step 4: Complete development of sustainability map Timeline: Following report's approval by council -Step 1: 18 months; Step 2: 24 months; Step 3 and 4:24 months Investment: $10,000 to $50,000260 Partner(s): Santa Monica CVB, private sector IT companies, hospitality & transportation clusters, local marketing companies. Target Sector(s): Accommodations and Food Services, Retail Trade Objectives: Attraction /Retention Sustainability is, increasingly, an important competitive element in differentiating among locations, hotels and restaurants in the tourist industry. This trend will only increase as sustainability, becomes more mainstream in the coming years and Santa Monica is well positioned with its strong credentials as a North American sustainability leader. These credentials will be an important vehicle to increase visitors to the city, thereby maximizing reinvestment in the local economy, particularly in the accommodation and food sectors The biggest interest in sustainability will typically come from business travelers whose companies have made a commitment to sustainability in their supply chains. Such visitors seek out the most sustainable destinations, hotels and restaurants fortheirtravel, business hosting and conferences. Santa Monica's well developed tourist infrastructure and sustainability position enables it to capitalize on this trend, though its lack of substantial conference facilities will limit its gains from this advantage. In a world increasingly suspicious of unsubstantiated "greenwash ", it is critical to be able to demonstrate sustainability credentials, at the community level, and at the level of local hotels and restaurants, before . marketing Santa Monica as a "green" destination to visitors. At the level of hotels and restaurants, establishing sustainability credentials is challenging. Though rating systems exist, they tend.to differ from jurisdiction to jurisdiction, and therefore a rating system's credibility is only high among travelers within that jurisdiction. Among long distance travelers, a rating system may be less effective than a well publicized community -wide effort among all hospitality providers to seek to become as sustainable as possible. With that in mind, Santa Monica should defer mounting any sustainability -based marketing aimed at visitors until cluster -based work in the hotel and restaurant sectors (see Recommendation 3.1.) have reached a point where local properties can demonstrate a clear difference in sustainability achievement over many of their peers in other competing jurisdictions. 260 A note on the investment necessary for this recommendation: Stand alone sustainability- related tourist marketing plan $50,000 - ($20,000 if sustainability- related material was added to regular on -going campaigns) Sustainability conferences, depending on size and partnerships: $10,000 per conference per annum. Map: up to $20,000 to create, $5,000 per annum to update, depending on partnerships. 153 STRATEGY FOR ASUSTAINABLE LOCALECONOMY - 4�..rr SECTION III: ROADMAP FORSUSTAINABILITY eQYI►,VOiCe StYQfegi@S CHAPTER13: RECOMMENDATIONS FORA SUSTAINABLE LOCAL ECONOMY Once the industry specific clusters have been established a consultant should be engaged by the CVB to build sustainability considerations into the CVB's marketing messages and targeting. This messaging should be consistent with marketing to businesses messaging in Recommendation 6.1: One resource that should be considered in this marketing effort is a map that incorporates walking tours of Santa Monica's sustainability, achievements. The map would showcase the city's sustainability efforts and would be a useful tool in demonstrating the community s achievements to both business and personal travelers. Such maps need to be carefully designed to convey a lot of information, some quite technical, while remaining appealing and easy to use. They require a significant effort to keep updated, so downloadable internet based maps are most useful. Private sector involvement in this project, including possible volunteer work and participation from corporate employees as part of their CSR programs, should also be encouraged. Another target of the marketing campaign should be to host green- themed conferences. This is an excellent way of conveying a green message while supporting the local tourist industry. Santa Monica already does this through its support for two annual conferences: the AltCar and Altbuild expo. These conferences have the additional benefit of educating Santa Monica businesses and residents on the latest developments in thinking about sustainability in specific areas. The Altbuild expo may be particularly helpful in advancing work in sustainable buildings (see Recommendations 5.1, 5.2 & 5.3). As cluster -based work in othersectors develops, it may be appropriate forthe City, in partnership with the CVB and other private- sector partners, to consider hosting annual conferences on topics of relevance to these clusters, as a way of advancing sector work, while marketing the city's achievements and supporting the local hospitality industry. Once the work of the clusters forthe hospitality industry is well established, the City, the CVB and other partners should develop and implement a plan to make community and hospitality industry achievements in sustainability an integral part of the CVB's marketing to business and personal travelers. SUMMARY OF STRATEGIES The Gantt chart in Table 43 summarizes all of the recommended strategies and the associated financial investment to implement a sustainable local economy in Santa Monica, and presents an estimate of the timeline for their execution. Table 44 assesses each recommendation against: • Impact on the goals of this report, namely: greening existing businesses, attraction and retention of sustainable businesses and maximizing reinvestment in the local economy as well as support for local business. • Their impact on wages, revenue, resource intensity and contribution to city revenues. It also indicates which recommendations are required because they lay the foundation forthe others and which are programmatic and should be prioritized drawing on feedback from the business community and other stakeholders. 754 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSI-AINABILITY 6PYr vo1C@ s'rrafegies CHAPTER13: RECOMMENDATIONS FORASUSTAINABLE LOCAL ECONOMY Table 43: Summary of Strategies Initiative Investment Year 1 Qi Q2 Q3 Q4 Year 2 Q1 02 Q3 Q4 Year 3 Q1 Q2 Q3 Q4 Year 4 41 Q2 Q3 Q4 Year 5 Q1 Q2 Q3 Q4 1 SUSTAINABILITY PARTNERSHIP WITH BUSINESS 1.1 Sustainability, Working Group Existing $ x— —=---------------------------- - - - - -' 1.2 Make Recommendations to Improve Business Climate $35,000 x— - - - - -x x —x x - -x x —x 1.3 Recognize Sustainability Achivements of Santa Monica $20,000 x— —x Businessess - 2 SUSTAINABILITY CENTER 2.1 Sustainable Santa Monica Center (SSMC) $25,000 x— --x 2.3 Sustainable Business Hub TBD x - -- - - -� - - -x — 3 HIGH IMPACT STRATEGIES 3.1 Cluster Networking $120,000 x-------- x------- x---- x---------- - - - - -> 3.2 Sustainable Supply Chains $80,000 x -- - -x x— - - - - - -x x— - -x 3.3 Business Ecology Networks $10,000 x - -, - -x x-- - -x x— —x x— - -x 4 MAXIMIZE LOCAL PURCHASING 4.1 Create Local Business Baseline - $20,000 x - - -x 4.2 Assess Retail Leakage - $50,000 x— —x - 4.3 Plug Retail Leaks Existing $ x -- ----- - - - - -x 4.4 Expand "Buy Local' Campaign Existing $ x— —x 4.5 Sustainable Retail Center $25,000 I x -- - -x x -- - -x 5 GREEN COMMERCIAL INFRASTRUCTURE 5.1 Building Energy Retrofit - Existing $ x -- -- - - - - -x 5.2 Solar Grants $500,000 x— - - - - - -- - - - -x 5.3 Downtown Energy Efficiency - $50,000 x - -x x— —x x -- - -x 6 MARKETING SUSTAINABLE SANTA MONICA 6.1 Attract Sustainable Businesses $100,000 x - -x x— - -x x— - -x x - -x 6.2 Attract Sustainability - minded Visitors $50,000 x— _Ix— - -x Total Investment'l $585,000 Total excludes Sustainable Business Hub because investment is TBD and Solar Grants because these funds are to come from sources extemal to the ury, 155 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILIY ectl- Ce:g[e5 CHAPTER 13: RECOMMENDATIONS FOR A SUSTAINABLE LOCAL ECONOMY _n. ars_u 1.1 Sustainability Working Group R 1.2 Improve Business Climate R 1.3 Recognize Sustainability Achievements R 2.1 Sustainable Santa Monica Centre 2.2 Sustainable Business Hub 3.1 Cluster Networking 3.2 Sustainable Supply Chains 3.3 Business Ecology Networks 4.1 Create a Local Business Baseline R 4.2 Assess Retail Leakage 4.3 Plug Retail Leaks 4.4 Expand Buy Local Campaign 4.5 Sustainable Retail Center 5.1 Building Energy Retrofits 5.2 Solar Grants 5.3 Downtown Energy Efficiency 6.1 Attract Appropriate Businesses 6.2 Attract Sustainability-minded Visitors Note: A required recommendation is one that lays the foundation for others; the remaining recommendations are programmatic and should be prioritized drawing on feedback from the business community and other stakeholders. 156 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABIUTY �[1Yl I�VO1Ce. StYG- CL"i�(�'S CHAPFERI3: RECOMMENDATIONS FORASUSrAINABLE LOCAL ECONOMY This appendix provides additional details regarding the process used to select the key indicators used for modeling resource conservation and pollution generation as well as additional information about the selected indicators. The following indicators were excluded because they do not have set numerical targets: • number of Congested Intersections • urban runoff reduction • bus ridership • air quality • toxic air contaminant releases • fresh, local, organic produce • volunteering • basic Needs — Health Care • solid waste generation (instead can use un- diverted Solid Waste) • energy use (instead can use Non - Renewable energy use) • vehicle miles traveled (instead can use %Single occupancy Vehicles in commute) The following indicators were excluded because of data unavailability: • resource efficiency of local businesses • "Green" construction • toxic air contaminant releases fresh, local, organic produce • restaurant produce purchases business reinvestment in the community • quality Job Creation • percent and demographic profile of Santa Monica residents who live within a 1/2 mile radius of significant emissions sources • toxic air contaminant releases: Number of facilities in Santa Monica permitted to release Toxic air Contaminants (TACs) • percent of locally - produced, organic produce served at city facilities & institutions • health care: percent of residents with health insurance • health care: capacity of local health service providers to meet the basic health care needs of Santa Monica residents The following indicators were excluded because they were not relevant to resource consumption: urban runoff reduction • warnings at Santa Monica Bay — beach • air quality • economic diversity • jobs/ Housing balance • income disparity • cost of living • local employment of City staff The following indicators were excluded because they were not relevant to either resource consumption or pollution generation: 157 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY .a! SECTION III: ROADMAP FOR SUSTAINABILITY eoA1kvoie_e s-ti-ctegies APPENDIX I: INDICATOR SELECTION • open space and land use indicators • open space • trees • parks - accessibility • land use and development • regionally appropriate vegetation Housing Indicators: • availability of affordable housing • distribution of affordable housing • affordable housing for special needs groups • production of "livable" housing • production of "green" housing Community Education and Civic Participation Indicators: voter participation • participation in civic affairs • empowerment . • community involvement volunteering participation in neighborhood organizations sustainable community involvement 1 • sustainable community involvement 2 Human Dignity Indicators: • basicNeeds — Shelter basic Needs— Health Care basicNeeds — Economic Opportunity • basic Needs — Public Safety residents' perception of safety • incidents of abuse incidents of discrimination • education /Youth • empowerment • ability to meet basic needs The following indicators were excluded because they are not Relevant to the Economic Base: • sufficiency of transportation options • indicator of sustainable procurement for the City • bus ridership • city purchases of hazardous materials • vehicle ownership • bicycle lanes and paths • alternative fueled vehicles — City fleet • residential use of sustainable trans, options • residential household hazardous waste • pedestrian and bicycle safety • traffic impacts to emergency response 158 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY SECTION III: ROADMAP FOR SUSTAINABILITY eCtt- -e SfYCtfeg1e-S APPENDIX I: INDICATOR SELECTION - The following indicators were excluded because of insufficient ability to change them on the City's part: • food choices • Ecological Footprint (this is really an indicator of indicators) 159 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY �{ } SECTION III: ROADMAP FOR SUSTAINABILITY E.'GYI I>tVOt -e S.YG {egie:& APPENDIX I: INDICATOR SELECTION INDICATOR RATINGS Table 45 summarizes the ratings for Environmental and Public Health, Resource Conservation, Transportation, and Economic Development Indicators. Other indicators were not considered as they are not relevant to resource consumption or pollution generation for the city's economic base. Table 45. Indicator Ratings p�Note: Tery •0 + + 'tis +li��!t��r3T �3' iq n� }�tv 2F[yy }Z }�} ?.`mot 4 }��Pj 2l � A a p ' rr - "',,y,�, ' &"•9h .A @ =r.;, "�,, '''�� F 2'ty4 �''� V %tt � �� �- +�' , Yy�ts � x 'E» sit ��t+ �,< '3�.S�+. Relevan .. �, 4�.. ➢tS+l+Y+�i�yrd, 4rF eleV rit;' off, } t,.,:u t� {aYS <t� �S*,t x tiLlegree Of J.. '^ks�iI�+P F �a ��nY ,,a�7.=<'�ti� "i�' }a?�zrN� .k�{ 5 ,w,�' ptllcator° r•� Ty eOflntlicator� �r ' Corsumptlon tT Resouurce4��Po11'u�tro g�� , Ge, eratlo , 3��v;Yr��� l }�COntrolTov g , �t)ataAvallable ,. xOvera ll Rat in "���� g4 ���� Resource Conservation Resource Conservation Resource Conservation Resource Conservation Resource Conservation Generation Ecoligical Footprint STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY APPENDIX I: INDICATORSELECnON 160 earfhvoice strategies 9 Vehicle Miles Environmental and 5 5 4 3 Yes 4.25 Not Excluded Traveled Public Health %Single Occupancy 10 Vehicles In Transportation 4 5 4 3 Yes 4.00 Not Excluded Commute Number Of 11 Congested Transportation 3 5 3 3 Yes 3.50 Not Excluded Intersections Insufficient 12 Food Choices Environmental and 3 3 3 2 Yes 2.75 Control to Public Health Change Not Relevant to Urban Runoff Environmental and 2 5 4 2 Yes 3.25 Resource 13 Reduction Public Health Consumption - (score <= 2) Not Relevant to - Waronica Environmental and Yes 3.00 Resource 14 :Santa Monica Public Health 2 4 4 2 Consumption Bea - - (score <= 2) Not Relevant to Environmental and 5 3 2 Yes 3.00 Resource 15 Air Quality Public Health 2 Consumption (score< =2) Not Relevant to Economic 1 1 5 4 Yes 2.75 Resource 16 Economic Diversity Development Consumption (score <= 2) STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY APPENDIX I: INDICATOR SELECTION 161 ear�.vo -ice strut -egies STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY APPENDIX 1: INDICATOR SELECTION 162 earfhw•ice sf'rateg %s Not Relevant to 17 Jobs /Housing Economic 1,- 1 5 3 Yes 2.50 Resource Balance Development Consumption (score <= 2) Not Relevant to Economic 1 1 5 - 2 Yes 2.25 Resource 18 Income Disparity Development Consumption (score <= 2) Not Relevant to 19 Cost of Living Economic 1 1 5 1 Yes 2.00 Resource Consumption Development (score <= 2) Not Relevant to Local Employment Economic 1 3 4 5 Yes 3.25 Resource 20 of City Staff Development Consumption ' (score < =2) Sufficiency of -- Not Relevant to 21 Transportation Transportation 4 5 2 4 Yes 3.75 Economic Base Options (score <= 2) Indicator of Not Relevant to 22 Sustainable Resource 5 5 2 2 Yes 3.50 Economic Base Procurementfor Conservation (score < =2) The City Not Relevant to 23 Bus Ridership Transportation 3 5 2 3 Yes 3.25 Economic Base (score <= 2) City Purchases of Not Relevant to 24 Hazardous Environmental and 1 5 2 5 Yes 3.25 Economic Base - Public Health (score <= 2) Materials STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY APPENDIX 1: INDICATOR SELECTION 162 earfhw•ice sf'rateg %s ti i "{�i� �l µx asyj „5'1a�knpk rtI i t �3Y.4 1 `� 1 , :,Y` T,a i`fv� S`l �k$ t � 1'4 l'�5?kg}`f�� Relevant � ii�a 1..� To �r.;y' Relevan�o [}'Ht f'� - } x { {.es3 ,` \ {y }` Yl 4` "i D B 2(♦3*i (t �Stit� ����_.5# C �; Q3 k \)%2'hA {. �t �}� b`T^v t'. �. Y2_ --�`.y v, �kdlcator L:vi}is Type U indicator h m -, i'P 'L }4"Iiii{i Respurce , c } {a`iiw. Pollution��m�! a,1, h .REIEYd t O Eeo amicBase b.33;YszYit r ` r. -�Yix ontrolT :! �t y,S °r Data AWailable� 3 „h..t4:1 $s,.itt,rdSi:^ ve alf a mg7 a5 O n �q isportation Transportation TransAirtabin Sustainable .. Transportation . Options Residential Transportation Transportation Economic Releases STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY APPENDIX I: INDICATORSELECTION 163 enri1+vo1ce strategies 164 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY eQYIItVOICe Stro- teg[eS APPENDIX 1: INDICATOR SELECRON DETAILS ON POTENTIAL INDICATORS Table 46 provides further details on the potential indicators, all drawn from the Sustainable City Report. 'rnhlo A9, notnilc nn Pntantinl Indirntnm 165 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY ectr- i APPENDIX I: INDICATOR SELECTION Diverted Solid Amount to diverted from landfill 70% of total by 2010 Yes 1 Waste (recycled, composted, etc) 2 Water Use Total citywide use Reduce overall water use by 20% by 2010. Yes Water Use Percent locally obtained potable Increase the amount of locally obtained 3 .. _ potable water to 1995 high point of 70% of Yes total water use by 2010. Greenhouse Gas City Operations At least 30% below 1990 levels by 2015 Yes 4 Emissions Total City Operations emissions Greenhouse Gas Total citywide emissions At least 15% below 1990 levels by 2015 Yes 5 Emissions Wastewater Total citywide generation Reduce wastewater flows 15% below 6 (Sewage) 2000 levels by 2010 Yes Generation Renewable Energy Percent of citywide energy use More than 25% of all electricity use in 7 Use: All Electricity from renewable and more efficient Santa Monica should come from Yes Use sources renewable sources by 2010 Renewable Energy Total energy use from clean At least 1% of all electricity use should not g Use distributed generation sources in come from clean distributed Yes Santa Monica generation sources in Santa Monica Average Vehicle Average vehicle ridership (AVR) AVR of 1.5 by 2010 for Santa 9 Ridership of Santa Monica businesses with Monica businesses with more than 50 Yes more than 50 employees employees Jobs / Housing Ratio of the number of jobs in Ratio should approach 1 10 Balance Santa Monica to the amount of Yes 165 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY ectr- i APPENDIX I: INDICATOR SELECTION Table 47 provides further details on potential indicators without a numerical target, all drawn from the Sustainable City Report. Table 47.• Potential Indicators without a 1 Solid Waste Amount land-filled Do not exceed year 2000 levels by 2010 No Generation Energy Use Total citywide use Target pending completion 2 of Greenhouse Gas Emission No Reduction Strategy in 2003 Vehicle Miles Total Downward Trend No 3 Traveled Number Of Downward Trend 4 Congested No Intersections Urban Runoff Percent of permeable land area in Upward Trend. No 5 Reduction the city Bus Ridership Annual ridership on Santa Upward Trend Monica Big Blue Bus (BBB); Percent of residents who have ridden the BBB in the past year; Percent of No 6 residents who have ridden the Tide shuttle in the past year; Annual ridership on MTA routes originating in Santa Monica AfrQuality %Single occupancy Vehicles in Downward trend No 7 commute Fresh, Local, Percent of fresh, locally - produced, Annual Increase Over Baseline 10 Organic Produce organic produce that is served at city No facilities and other institutions - Volunteering Percent of Santa Monica Upward Trend residents volunteering and total No 11 hours volunteered in selected City funded public benefit programs 166 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY APPENDIX I: INDICATOR SELEdON Source: City of Santa Monica 167 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY - e.QYVI APPENDIX I: INDICATOR SELECTION This appendix provides notes on specific initiatives to green existing business, attract and retain green businesses, and maximize local re- investment from interviews with local government officials in five cities. The cities and officials interviewed were: San Francisco: David Pascal, Clean Technology and Green Business, david.pascal @sfgov.org www.sfgov.org Seattle: Steve Gerritson, Business Development Manager, Enterprise Seattle, serritson@enterpriseseattle.org, 206 - 389-8656 www.enterpriseseattle.org Boulder: colorado.gov, (303) 441 -3287, www.bouldercolorado.gov Liz Hanson, Business Liaison ,hansonl @boulder Bill Hayes, Boulder County Public Health, PACE Team Lead, bhayes @bouldercounty.org, (303) 441 -157, www.PACEpartners.com, www.BoulderCountyHeaith.org Portland: Peter Cunningham, Business & Industry Division Manager, Portland Development Commission, cunninghamp @pdc.us, 503- 823 -9066 http: / /www.pdc.us Burlington: Bruce Seifer, Assistant Director for Economic Development, Community and Economic Development Office, bseifer @ci.burlington.vt.us www.ci.burlington.vt.us 168 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY eQrthVOice- strotegies APPENDIX fl: SPECIFIC INITIATIVES IN SAN FRANCISCO, SEATTLE, BOULDER, PORTLAND AND BURLINGTON Table 49: Energy Efficiency program Initiatives in Select U.S. Cities with zero Waste Alliance: "Best Business Boulder Portland -A series of incentives to upgrade energy efficiency such as discounted materials an - Solar highways project, solar cities - Every building has to be LEED certified -Free services to companies to take advantage of City loans. Information on how to improve profitability, how to optimize environmental performance through practices that lead to the reduction and elimination of waste and toxins - Free tools and advice to help companies become more profitable and sustainable by conserving resources and improving efficiency; coordinator helps identify goals, like a sustainability consultant to coach on how to make your business more sustainable. - Partnership between the city, regional government programs, utilities, many divisions of city government. - Streamlines financial incentives and provides free technical assistance for greening STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY eur�wic� s #rufegies APPENDIX II: SPECIFIC INITIATIVES IN SAN FRANCISCO, SEATTLE, BOULDER, PORTLAND AND BURLINGTON operations to local organic farmers, encourage buying local to support Portland -Very committed Local Business agriculture - Successful farmer's market in operation since the 70's. - Region's green dividend: allows Portlanders to spend a greater portion of theirtime in local goods services and entertainment activities tatherthan on transportation speakers. (for example Tom Friedman who gave an update about Partner with other groups, such as Ecotrust - Bring in respected his book on Green Technology and its importance to the future of research for recent our country) County approved a tax to help fund renewable energy, for example Renewable Energy Fund Boulder - Residents of the a low Interest loan for Installing solar panels.y.y t 4 1 it(4$�}�.f,,j,, iy�able,.BBSmess� t d .Y�ii`�''Y�i1 V.1JT�c "} i��fvit�` (1 Iy.. a§ SR1ff� .:.Y2�.il.}aaUSV:w.KiVssuv..vw. ;` ALfraet53mg /RenVtae2mm�°Su'sW} iP:n�^i'�,11rv'e."{4i'&'£'-1 TIAl �'ti4'fY Payroll tax exemption for clean tech companies - Money f omrdiscretionary funds t prole de extraY noentive on top of state and City Solar Incentive San Franc sco federal incentives, that almost matched those, 769 STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY eur�wic� s #rufegies APPENDIX II: SPECIFIC INITIATIVES IN SAN FRANCISCO, SEATTLE, BOULDER, PORTLAND AND BURLINGTON Up to $6000 ttr per installation helped many of the solar companies locally, and it also started to aact some of the solar manufacturers and other solar players. Many came for other reasons, but this was an incremental bonus that influenced them to come Financial Incentives - Subsidies San Francisco - Payrolltaxrebateorexemption - Office or commercial space that can be subsidized by the City where a cluster of business can be launched. Boulder - Flexiblerebateprogramforprimary employers ,companiesthatarebringingthe majority of their revenues from outside of the city into Boulder. Have had several green businesses that were beneficiaries. Allows businesses to ask for rebates on taxes and fees that they have paid in. Either due to expansion of their facility, purchase of equipment and so on. Portland - "Secret Weapon" BETC (Business Energy Iaxcredit - "Betsy ")program. Significant amounts of money were allocated from BETC to get major wind energy manufacturerto locate in Portland. City, state, local governments work together to puttogetherthe most competitive package they can. Networking Business Clusters Boulder - Natural and organicfoods, Active Living industry cluster - gone from a city task force into a very impressive networking non - profit organization that has their own board of directors with an annual conference that draws people from all over the world The city may provide sponsorship, for example for a conference but businesses have "taken the cluster over". This has been a model for other industry clusters Physical Business Clusters San Francisco - Subsidized rent, other wraparound services, commercial real estate on more flexible terms, shorter term leases. Companies can grow or contract quickly, which is common with early stage companies Commission an in -depth survey and analyze San Francisco - Identify industries that are well matched for Santa Monica and focus on those. This Santa Monica's economy and economic may be something simple like looking at all the business licenses and sorting them advantages by Industry codes to see if there are already any naturally occurring concentrations of any particular type of green company - Partner with a group like NRDC to "map the clean tech space ", orthe green companies in Santa Monica that could serve as a road map 170 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY ear't{'+voiCe. s'f'rexf'egi.s APPENDIX II: SPECIFIC INITIATIVES IN SAN FRANCISCO, SEATTLE, BOULDER, PORTLAND AND BURLINGTON Communication with businesses San Francisco - "old fashioned being outthere". Talk aboutcity, state and federal incentive programs - Work with professional services sectorto re- package information from the City and use as a business development opportunity for them -Tap into anyothergroups or loci of activity, forexample,the NRDC head offices in Santa Monica. Start to convene meetings there, help launch, partner to get the . word out - - NRDC would be a great partner to talk to about starting a green incubator. Use their office as a venue, an "anchor" for periodic meetings, mixers, social networking Modifications to zoning overlay that would San Francisco -R &D, manufacturing, pilot startup companieswhereitsarelativelysmallspace, make it more conducive to start up integrated butthere is a need for mixed use space such as warehouse and offices. When use companies everything else is aligned and these types of companies have an interest to come to your city, you want to "make sure that they can quickly find a home' Use Real Estate agents as partners for the city San Francisco - If the city lets realtors know: "we want to go after a green economy, clean tech companies, these are the kinds of companies we want to attract and the reasons why Santa Monica would be a good fit for them" then real estate people will use -their networks and reach outto comoanies Communication with other government organizations Boulder Portland Smart Grid City - Boulder STRATEGY FOR ASUSTAINABLE LOCAL ECONOMY APPENDIX II: SPECIFIC INITIATIVES IN SAN FRANCISCO, SEATTLE, BOULDER, PORTLAND AND BURLINGTON - "Business Liaison" position created because there was a feeling that city was "anti - business" or "not business friendly ". Business Liaison works closelywith the Chamber of Commerce, and with the Boulder Economic Council, which is a side -arm of the Chamber - Coordination between . the city and the Chamber, Economic Council, Small business development center and downtown organization is quite seamless. Get together on. outreach, work together on clusters and business retention issues -The "Business Liaison" position is the only funded position in the program, so she has to work with a team. The city is able to deliver more services with these business partners - When travelling overseas, all representatives promote the entire state and all cities together. They focus on client needs, and direct them to the best place in the state to meet their needs (urban /rural /airport, etc.) - Co- ordination with the city and the local power company. Every resident and business in Boulderwill be on this smart grid. Currently in infrastructure stages, will be able to: 171 erxri�-nva:ca s�- rcl- egi�es 972 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY APPENDIX II: SPECIFIC INMATMES IN SAN FRANCISCO, SEATTLE, BOULDER, eGTi/^IVOiCe Sfl-Kff@ ie5 PORTLAND AND BURLINGTON -Log into your computer, see what your Energy costs are, and decide When to run your dishwasher -Feed your excess solar power into the grid - Have a plug in car that can pull Energy off the grid. - City acknowledged by President Obama when he signed the stimulus bill Host an "International Road Show" in Portland - Bring back representatives from the state to meet with small businesses: Qualified collaboration with the State businesses have minimum $1 million annual sales, in business more than 3 years, some experience selling their products locally or regionally, some interaction with ' Canada so they have foreign documentation - Introduce representatives to companies pre - qualified for the road show initiative. Representatives will go on the road to other cities throughout the state. Objectives are to find partners in these key markets that will generate sales and create jobs. Go after stimulus package from federal Portland, - Look for ways to maximize the federal tax benefits, match with state and local government San resources to help companies and communities survive the economic downturn Francisco, Burlington '' Vlax mrzm Re mue finen +m Loca Econom ran �... ti ,.��.��a�..�,.� ' " + L' `� r �� �� ` ' f " � r��� - Range of activities that are community focused and that support community Work with Businesses on events, street fairs San Francisco businesses Structure incentive programs to require some San Francisco - For example, the solar incentive doesn't pay for a full system: the property owner type of a matching contribution has to invest, but it gets them enough of the way there that they might be willing to spend their own money as well, then the city an leverage that. -Other programs and policies for example where banks have a certain amount of community re- investment Programs like "new market tax credits" tend to be larger programs that encourage community investment as opposed to anything directly from the city. Business training programs Portland, Fortheir own companies, forthe community or for other companies, for example Burlington solar companies Require incentive program to meet Boulder - Includes social responsibility, such as non - profit support, recycling, bus passes sustainability guidelines Buying Local Boulder - City works with Independent Business Alliance supports them and refers businesses to them. Connect with BALLE. 972 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY APPENDIX II: SPECIFIC INMATMES IN SAN FRANCISCO, SEATTLE, BOULDER, eGTi/^IVOiCe Sfl-Kff@ ie5 PORTLAND AND BURLINGTON - Create incentive guideline to encourage companies to buy locally. The challenge is that the Independent Business Alliance wants to focus on local independent business, whereas the City wants to promote "buy local" in general: for example buying at the local Home Depot, to get the sales tax dollars. - Work on definition of "local" 173 STRATEGY FOR A SUSTAINABLE LOCAL ECONOMY yy�� APPENDIX [I: SPECIFIC INrr1ATIVES IN SAN FRANCISCO, SEATTLE, BOULDER, SfYC.eteia[e5 PORT ANDAND BURLINGTON &� 3 • Section I: The City's Current State — Regional and Global trends • Section II: Desired Outcomes — 9 Principles for a Sustainable Local Economy — Wages, Revenues and Resource Use Analysis • Section III: Roadmap to Sustainability — 6 Strategies to attract and retain business �nt Recommended Principles(cont., it 7 1 Continue to examine options to increase workforce housing in Santa Monica 8 When targeting businesses for attraction, while taking into account the resource consumption /pollution generation of sectors, focus more on sustainable processes and services rather than green products Fine tune and focus criteria used for the Sustainable Quality Awards for g identifying firms to be targeted for relocation to Santa Monica �. MAIk I= The 6 recommended strategies focus on: • Greening existing businesses • Attracting /retaining sustainable businesses • Maximizing re- investment in the local economy Recommended Strategies (Cont.) 4. Maximize Local Purchasing Identify opportunities to increase local purchasing and green supply chains Intensify `Buy Local" efforts 5. Green Commercial Infrastructure Develop a long -term approach to "greening" new and existing commercial buildings 6. Marketing Sustainable Santa Monica — Market Santa Monica to businesses and visitors by capitalizing on sustainability brand t �,Izl ME Efforts underway to implement the six recommended strategies include: 1. Create Sustainability Partnership with Business — The Santa Monica Alliance — Sustainable Quality Awards — Arts Earth Partnership 2. Develop Sustainability Center — Sustainability at the Airport 3. Implement High Impact Strategies — Business Greening Program — Green Business Certification — I Am Santa Monica — City's fiber optic network (dark fiber, City's free WiFi) Sustainable Information Systems Department Awards SANTA MONICA CHAMBER OF COMMERCE 7 Sustain able5=t Environmental Education and Action i Q f s a Remaining recommendations yet to be implemented include: • Sustainable business hub (Strategy 2: Sustainability Center) • Green supply chains (Strategy.3: High Impact Sector Strategies) • Create a local business baseline (Strategy 4: Maximize Local Purchasing) • Plug retail leaks (Strategy 4: Maximize Local Purchasing) • Sustainable infill big box development (Strategy 4: Maximize Local Purchasing) • Building energy retrofit ordinance (StrategyS:Green Business Infrastructure) Vii. V �? s,l THE FAILURE OF EMPLOYMENT AND LABOR LAW FOR LOW -WAGE WORKERS Ruth. Milkman i. Y➢ with Annette Bernhardt, Nih Theodore, Douglas Heeltathoran, Mirahai Aner, Janaes DeFilippis, Jason Ferelshteyn, Diana Po ➢son, and Michael Spiller Institute for Research on Labor and Employment University of California, Los Angeles 2010 © 2010 by Ruth Millman, Ana Luz Gonzalez, and Victor Narro ISBN: 978 -0- 89215 -008 -3 UCLA Institute for Research on Labor and Employment 10945 Le Conte Avenue, Suite 2107 Los Angeles, California 90095 -1478 EXECUTIVE SUMMARY The United States is facing a workplace enforcement crisis, with widespread violations of many long - established legal standards. The crisis involves laws dating back to the New Deal era that require employ- ers to pay most workers at least the minimum wage and time - and -a -half for overtime hours and that guarantee the right to organize and bring complaints about working conditions. Also violated frequently today are more recent laws designed to protect workers' health and safety, laws that require employers to carry workers' compensation insurance in case of on-the-job irl ury, and laws that prohibit discrimination on the basis of age, race, religion, national origin, gender, sexual orientation, or disabil- ity. Los Angeles, as this report documents, has an especially high rate of workplace violations, even relative to the nation's other large cities. This report focuses on the findings of a survey of 1,815 workers in Los Angeles County, conducted in conjunction with similar surveys of Chicago and New York City in 2008. Using a rigorous methodology, this research study included interviews with unauthorized immigrants and other vul- nerable workers who are often missed in standard surveys. The goal was to obtain accurate and statistically representative estimates of the prevalence of workplace violations. All findings are adjusted so that they are representative of the larger population of front -line workers (that is, excluding managers and professional and technical workers) in low -wage industries in L.A. County in 2008. This population includes about 744,220 workers, or 17.0 percent of all workers in L.A. County. The survey found that low -wage workers in Los Angeles regularly experience violations of basic laws that mandate a minimum wage and overtime pay and are frequently forced to work off the clock or during their breaks. Other violations documented in the survey include lack of required payroll documentation, being paid late, tip stealing, and employer retaliation. In nearly every case, the violation rates are higher in Los Angeles than in New York and Chicago. 2:I EXECUTIVE SUMMARY MINIMUM WAGE VIOLATIONS Almost 30 percent of the L.A. workers sampled were paid less than the minimum wage in the work week preceding the survey, a higher violation rate than in New York City, but with no statistically signifi- cant difference from Chicago. The minimum wage violations were not trivial in magnitude: 63.3 percent of workers were underpaid by more than $1.00 per hour. «' OVERTIME VIOLATIONS Among all L.A. respondents, 21.3 percent worked more than forty hours for a single employer during the previous work week and were therefore at risk for an overtime violation. Over three - fourths (79.2 percent) of these at -risk workers were not paid the legally required overtime rate by their employers. Like minimum wage violations, overtime violations were far from trivial in magnitude. Those L.A. respondents with an overtime vio- lation had worked an average of ten overtime hours during the previous work week. OFF -THE -CLOCK VIOLATIONS Nearly one in five L.A. respondents (17.6 percent) stated that they had worked before and/or after their regular shifts in the previous work week and were thus at risk for off - the -clock violations. Within this group, 71.2 percent did not receive any pay at all for the work they performed outside their regular shift. MEAL AND REST BREAK VIOLATIONS Among all L.A. respondents, 89.6 percent worked enough consecu- tive hours to be legally entitled to a meal break. However, more than three - fourths of these at -risk workers (80.3 percent) experi- enced a meal break violation in the previous work week. The L.A. meal break violation rate was higher than that found in New York City, but Chicago had the lowest rate of the three cities. °>:a California law requires employers to provide workers ten - minute rest breaks during each four -hour shift (or two ten - minute rest breaks in a standard eight -hour shift). However, this requirement is often violated. The survey found that 81.7 percent of respondents eligible for rest breaks were either denied a break entirely or had a shortened break during the previous work week. EXECUTIVE SUMMARY ,: 3 OTHER PAY VIOLATIONS California law requires that all workers — regardless of whether they are paid in cash or by check — receive documentation of their earnings and deductions. However, 63.6 percent of L.A. respondents did not receive this mandatory documentation. California employers are generally not permitted to take deduc- tions from a worker's pay for damage or loss, work - related tools, materials or transportation, or uniforms. However, among L.A. respondents who reported deductions from their pay, 45.3 percent were subjected to such illegal deductions. It is illegal for employers or managers to appropriate any portion of the tips provided by customers in restaurants or other settings where tips are customary. However, 19.2 percent of tipped respon- dents in L.A. experienced such "tip stealing" during the previous work week, a much higher rate than for the other two cities studied. ILLEGAL EMPLOYER RETALIATION Among all workers in the L.A. sample, 14.7 percent had either made a complaint in the year prior to their interview or (in a few cases) had attempted to form a union. Nearly half (47.7 percent) of those L.A. respondents who had made complaints or attempted to organize reported that they had experienced retaliation from their employer or supervisor as a result. Another 20.1 percent of L.A. respondents indicated that they had not complained during the previous twelve months even though they had experienced a serious problem such as dangerous working conditions, discrimination, or not being paid the minimum wage. A majority of the respondents in this group (59.7 percent) indicated that they did not complain because they were afraid of losing their job, another 13.6 percent feared they would have their hours or wages cut, and 31.4 percent thought it would make no difference if they complained. WORKERS' COMPENSATION VIOLATIONS The survey suggests that the workers' compensation system is very rarely used by low -wage workers. Only 4.3 percent of L.A. respondents who experienced a serious on-the-job injury during the previous three years had filed a workers' compensation claim for their most recent injury. 4 EXECUTIVE SUMMARY Of seriously injured L.A. respondents, 42.3 percent reported that they were required to work despite their injury, an additional 30.3 percent said their employer refused to help them with the injury, and 12.6 percent were fired shortly after the injury. Just over half (51.3 percent) of L.A. respondents who experienced a serious injury at work sought medical attention, but within this group, only 48.6 percent indicated that their employers paid any part of their medical bills. VARIATIONS IN VIOLATION RATES: JOB AND WORKER CHARACTERISTICS Workplace violations are the result of employer decisions — whether to pay the minimum wage or overtime, whether to give workers meal breaks, or how to respond to complaints about working conditions. Because some types of businesses tend to violate employment and labor laws more than others do, there is considerable variation in violation rates across occupa- tions and industries and related variables. Violations of labor and employment law also vary with the demographic characteristics of the workforce. Among L.A. respondents, minimum wage violations were greater for women than for men, and greater for immigrants than for U.S. -born workers. The very highest minimum wage violation rates were for female unauthorized immigrants, well over half of whom had a minimum wage violation in the previous work week. The impact of job characteristics like industry and occupation on vio- lation rates was consistently greater than that of workers' demographic characteristics. Job characteristics were 3.9 times stronger than worker characteristics in predicting minimum wage violation rates; 4.0 times stronger in predicting overtime violation rates; 1.1 times stronger in pre- dicting off - the -clock violation rates; and 2.2 times stronger in predicting meal break violation rates. DOLLARS LOST TO WAGE THEFT IN LOS ANGELES The various forms of nonpayment and underpayment of wages take a heavy monetary toll on workers and their families. L.A. respondents who experienced a pay -based violation in the previous work week lost an aver- age of $39.81 out of average weekly earnings of $318.00, or 12.5 percent. Assuming a full -year work schedule, these workers lost an average of $2,070.00 annually due to workplace violations, out of total annual earn- ings of $16,536.00. EXECUTIVE SUMMARY 5 M PUBLIC POLICY RECOMMENDATIONS Public policy has a fundamental role to play in protecting the rights of workers. Three basic principles should drive the development of a new policy agenda at the federal, state, and local levels. of Strengthen government enforcement of existing employment and labor laws through enhanced staffing and proactive strategies that target employers with the highest violation rates. Penalties for violations also need to be stiffened. Update legal standards by raising the minimum wage, updating health and safety standards, expanding overtime coverage, and strengthening the right of workers to organize through labor law reform. Establish equal status for immigrants to ensure that they have the full protection and remedies available under U.S. employment and labor law. Although in theory unauthorized workers are already covered by most employment and labor laws, in practice their lack of legal status, their fear of deportation, and the willingness of employers to exploit their vulnerability make enforcement espe- cially difficult for this part of the workforce. This is particularly critical in Los Angeles, which has a larger unauthorized immigrant population than any other city or county in the United States. books http://www.irle.ucla.edLi/publications/books.htn-d Home Contact Us About Us Publications Media Research Labor Studies Minor Links Why austerity must not mean the end of active labour market policies* Chris Tilly eA * Published in Priorties fora new political economy: Memos to the left by the !P- 1 Policy Network, May 2011. S >;w t 0„ New Solutions: A Journal of Environmental and Occupational Health Policy x Volume 20, Number 4, based on the 5th International Congress on Women, Work, and Health Edited by Leonor Cedlllo Becerril, Linda Delp, and Maria de Ins Angeles Gardurrlo Andrade lof5 11/l/20117:02PM I books http://www.irle.ucla.edu/publications/books.html Leaves That Pay: Employer and Worker Experiences with Paid Family Leave in California Eileen Appelbaum Ruth Milkman Wage Theft and Workplace Violations in Los Angeles: The Failure of Employment and Labor Law for Low -wage Workers Ruth Milkman Ana Luz Gonzalez Victor Narro with Annette Bernhardt, Nik Theodore, Douglas Heckathorn,Mirabal Auer, James DeFillppis, Jason Perelshteyn, Diana Poison, and Michael Splller Broken Laws, Unprotected Workers: Violations of Employment and Labor Laws in America's Cities Annette Bernhardt, Ruth Milkman, Nlk Theodore, Douglas Heckathorn, Mirabai Auer, lames DeFilippls, Ana Luz Gonzalez, Victor Narro, Jason Perelshteyn, Diana Polson, Michael Splller Confronting the Gloves -off Economy: America's Broken Labor Standards and How to Fix Them Annette Bernhardt Heather Boushey Laura Dresser Chris Tilly With assistance from Scott Martelle Organizing Prosperity: Union Effects on Job Quality, Community Betterment, and Industry Standards Matt Vidal (former IRLE postdoctoral fellow) David Kusnet 2 of 5 11/1/20117:02 PM