SR 09-26-2017 3B
City Council Report
City Council Meeting: September 26, 2017
Agenda Item: 4.B
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To: Mayor and City Council
From: Andy Agle, Director, Housing and Economic Development
Subject: Strategy for Long-Term Economic Sustainability
Recommended Action
Staff recommends that Council review and provide direction regarding the scope of a
strategy to address Santa Monica’s long-term economic sustainability.
Executive Summary
Santa Monica has enjoyed sustained economic prosperity over the past three decades,
resulting in both a strong fiscal balance sheet for City government and strong ongoing
revenue to support City services for residents. Local strategies put into place decades
ago have fueled high levels of retail sales, visitor spending, and tax revenue from
commercial businesses. As a result, Santa Monica has consistently outpaced Los
Angeles County as a whole across a wide range of economic indicators.
None of this should be taken for granted, however. Some futurists have predicted that
humanity will undergo more changes in the next 20 years than it has in the last
100 years. As the scope and scale of technological change and economic disruption
increases exponentially in the coming years, no sector of the economy will be left
unchanged, including local government. From internet retailing to autonomous vehicles
and from the sharing economy to automation of jobs, there is enormous potential to
transform how cities in general, and Santa Monica in particular, provide services and
pay for them.
Santa Monica’s success today derives from strategies developed by civic leadership in
decades past. It is prudent to be equally far-sighted in anticipating the future direction
of the international, national, and regional economies to assess the place of Santa
Monica and to take a pro-active role in safeguarding our community’s long-
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term prosperity. A healthy economy not only pays the bills for City services, it
undergirds the fabric of resident employment, the demand for city services, the sources
of support for civic and cultural institutions, and the upkeep of public and private
infrastructure that supports our standard of living and quality of life.
Tonight’s study session is intended to initiate a dialogue regarding how we strategize
and plan for the upcoming changes and disruptions to ensure that Santa Monica
continues to benefit from a strong and diverse economy that supports it as an
outstanding place to live, work, and visit.
Background
Santa Monica has long been engaged in planning for its future, from the elements of the
General Plan, such as the Land Use and Circulation Element, to specific plans, such as
the Downtown Community Plan. The City has also developed strategies and plans to
address key elements of Santa Monica’s local, sustainable, and creative future, such as
the Creative Capital cultural plan, the Sustainable City Plan, and the Strategy for a
Sustainable Economy. However, additional strategic planning to evaluate the
opportunities and threats is necessary given the level of economic disruption that is
expected to occur in the coming years.
Many observers have noted that the pace of technological change is increasing
exponentially. Technologies and ways of doing business are rapidly changing and are
expected to have significant impacts on how the City provides services and how it pays
for those services. Experts have started to identify how local governments may be
impacted by changes in the economy and have urged local governments to begin
planning for how to address the impacts and changes.
The changes not only pose threats to our traditional sources of prosperity and the local
revenues that support city services. They also present opportunities to enhance our
community standard of living, wellbeing, and quality of life. Proactive strategic planning
and implementation has the potential to enhance environmental sustainability and
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resilience in the face of acute and chronic stressors, from earthquakes to climate
change.
Some of the changes that are currently underway or expected to arrive in the near
future and that have the potential to significantly impact the City include:
Growing globalization and exploding digital communication that allows people to
work, live, shop, and visit anywhere, unrestrained by geographic advantages and
disadvantages, which has the potential to undermine key sectors of Santa
Monica economy, potentially leave high levels of business vacancy, and depress
City revenues associated with a strong business sector.
A growing share of retail sales over the internet, which has the potential to
transform our downtown and commercial corridors, as well as depress sales
taxes, the City’s largest revenue source, and business license taxes, while
leaving potentially high levels of business vacancies.
The implementation of autonomous, shared vehicles, which has the potential to
transform our streets, our parking facilities, and our public transit systems, as
well as depress revenues from parking fees, parking fines, traffic citations, and
sales taxes on automobiles and fuel.
The continued automation of jobs, which has the potential to transform how
services are provided to the community and who provides them.
Above are four key examples of changes associated with the changing global economy
that could impact City services and revenues. Given the pace of technological
advancement and economic disruption, it is likely that there are many other changes
that have yet to be developed or embraced on a broad scale, that nonetheless could
have significant impacts on Santa Monica.
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Previous generations of Santa Monica leaders had the foresight to take strategic steps
to ensure the strength of the local economy, from planning for the conversion of
obsolete industrial areas to contemporary employment centers, to investing in the Third
Street Promenade as an urban entertainment district that sparked the revival of Santa
Monica’s historic downtown, to selectively promoting travel and tourism that generates
revenue to support the local economy and underwrites the vibrancy of cultural, civic,
and experiential amenities. Previous generations did not have a crystal ball, though
they did have the wisdom and determination to anticipate economic changes and
proactively adjust to the changes in ways that have been generally beneficial for the
local economy and for the City’s ability to provide services and support a high quality of
life in Santa Monica. Given the continued global economic disruption before us, can
Santa Monica retail a competitive edge for commerce that is congruent with our values,
natural environment, and quality of life? Are there ways that we can reduce pollution,
minimize consumption of natural resources, preserve our heritage, promote equity and
diversity, strengthen our unique sense of place, and better serve our community by an
intentional strategy to be masters of our economic destiny?
There is significant danger in failing to plan for change. Not only does Santa Monica
risk erosion of its economic resilience as powerful market forces could overwhelm the
city in ways that could significantly undermine our quality of life. It has been observed
that “nature abhors a vacuum.” In the absence of well-thought-out plans and
consistently executed implementation and adjustments, global forces and faceless
corporate entities could determine the shape of our business sector in ways that
eviscerate our commitment to local businesses, environmental sustainability, and
respect for resident quality of life.
Discussion
Staff seeks Council direction on several foundational questions related to pursuing the
development of an economic sustainability strategy, as discussed below.
1. Should we devote time and resources to developing an economic sustainability
strategy?
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Developing an economic sustainability strategy is expected to involve an
investment of Council, community, and staff time and resources, as well as
resources for expert support and assistance in developing a strategy. While the
commitment of time and resources could be substantial, staff believes that the
costs of failing to plan for the future greatly outweigh the costs associated with
the planning effort.
2. If Council is supportive of moving forward, what should the scope of the effort entail?
There are a variety of means for developing a strategy of this nature.
One approach is to start at the broadest level by considering Santa Monica’s
competitive economic advantages and disadvantages, including our role in the
regional economy. Such evaluation could then support consideration of the
nature and focus of Santa Monica’s future economy. The consideration could be
supported by: (a) evaluations of opportunities to best support Santa Monica’s
local needs in the future, (b) analysis of the fiscal and economic impacts of the
community’s future evolution, and (c) needed changes in the City’s processes,
policies, regulations, and infrastructure to support desirable future advances in
technology and the way we live.
3. How does the Council wish to participate?
Development of a strategy could be a largely staff-driven exercise where staff
and consultants prepare reports, refine options, and return to Council for
approval at key stages. Alternatively, Council could be integrally involved in the
development of the strategy, including establishing subcommittees to consider
different elements of the strategy, which could then report back to the full Council
with findings and recommendations. Given the importance of the effort to the
City’s long-term sustainability, staff recommends strong Council involvement in
the development of the strategy.
4. How should the Santa Monica community participate in development of the
strategy?
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While Council would have ultimate responsibility for defining a strategy, staff
believes that the strategy would be enhanced by broad community engagement
among residents, businesses, and local stakeholders, with a variety of ways to
participate in the development of the strategy.
5. How can we best engage local institutions and partners?
The impacts of future changes will not solely affect the City. The school district,
college district, local organizations, non-profits, business organizations, and
business districts will also be affected. Allowing our partner institutions to
participate in development of the strategy presents an opportunity to achieve
optimal outcomes that benefit multiple participants.
6. How should we allocate resources for development of the strategy?
Preparing special studies and engaging community members will require staff
and financial resources. Given the City’s budget constraints and an already
overflowing staff workload, trade-offs will be necessary to support development
of the strategy.
7. Where should we start? What is the first step?
Preparing a strategy to help ensure Santa Monica’s long-term economic
sustainability is expected to involve many components and take place over the
course of several years. However, it is critical to identify where to begin.
One option is to engage a team of experts to begin the process of evaluating
Santa Monica’s competitive economic advantages and disadvantages relative to
the future economy, while at the same time initiating dialogue with partner
institutions, neighborhood groups, local non-profits, and business groups
regarding the effort and how they wish to participate. We may also want to invite
convenings and consultations with both influential and provocative thinkers who
are actively exploring the direction of global economic, technological, and social
changes, particularly as they may influence Southern California and
Santa Monica.
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Next Steps
Based on Council direction, staff would begin to identify experts and partners who can
support the initiation of the effort. Staff would return to Council before beginning any
formal studies or processes.
Financial Impacts and Budget Actions
Council’s initial discussion has no budgetary or financial impacts. Depending on if and
how Council wishes to pursue development of the strategy, staff and budgetary
resources would need to be allocated in the future to support the effort.
Prepared By: Andy Agle, Director
Approved
Forwarded to Council
Attachments:
A. Written Comments
B. Powerpoint Presentation
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Vernice Hankins
From:Jerry Rubin <jerrypeaceactivistrubin@earthlink.net>
Sent:Tuesday, September 26, 2017 11:12 AM
To:Jerry Rubin
Subject:Suggestion for addressing Santa Monica's longterm economic stability.....
Dear City Council, City Staff & Fellow Santa Monica Friends,
How about this unique suggestion for ensuring Santa Monica’s longterm economic stability?
Plant a few Money Trees!
Thank you,
Jerry Rubin
P.S. Hey, I thought it would be a TREE-MENDOUS idea!
P.P.S. I think I might mention it at the City Council meeting when the topic comes up on the agenda tonight.
Item 4-B
9/26/17
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Vernice Hankins
From:Elizabeth Van Denburgh <emvandenburgh@gmail.com>
Sent:Tuesday, September 26, 2017 2:43 PM
To:councilmtgitems; Ted Winterer; Councilmember Kevin McKeown; Tony Vazquez; Sue
Himmelrich; Pam OConnor; Gleam Davis; Terry O’Day
Cc:David Martin; Rick Cole; Laurence Eubank; Stacy Dalgleish; Andrew Gledhill; Tricia
Crane; Zina Josephs; cristopher
Subject:City Council Agenda - Study Session 4B. - Strategy for Long-Term Economic
Sustainability
Mayor Winterer and City Council Member,
While I applaud the long-term view and the 4B Study Session on how to fund the City I believe we should
focus our time and effort on the work that has already been accomplished. We have done significant planning
and have outlined a multitude of goals and objectives with specific time frames including our 2020 Water
Independence Commitment to addressing the ongoing homeless issue to moving the Airport to Park to no new
PM trips to ensuring all the buildings that have been assessed to be earthquake issues are reviewed and
retrofitted if necessary.
It would seem prudent to pull all this planning and designing work into a time-based strategic roadmap that
summarizes and synthesizes all the work the City has done to date. This type of approach will lay out the
timing and key milestones/activities to achieve our goals and objectives and will provide the framework for
what future revenue is needed (along with an evolution of declining revenue) to support the capital and
operational costs around projects and ongoing operations. While we have defined where we are and where we
want to go we do not yet have a picture of how to get there. I would suggest that the discussion of disruption by
technology is putting the cart before the horse in terms of near-term priorities for the City and its residents.
What have been planned and designed to achieve and then address the revenue to achieve it as well as the
analytics to ensure we are on target.
Thank-you for the work on behalf of the residents of Santa Monica.
Regards,
Elizabeth Van Denburgh
Resident and Wilmont Board Member
Item 4-B
9/26/17
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Chair
West Hooker-Poletti Locanda del Lago
Past Chair Yesenia Monsour Kaiser Permanente
Chief Financial Officer Dave Nelson
Tegner-Miller Insurance Brokers
Vice Chairman Richard Chacker Perry’s at the Beach Vice Chairman Michael Gruning
Pence Hawthorn Vice Chairman
Ellis O’Connor MSD Hospitality Fairmont
Miramar Hotel & Bunga-lows Vice Chairman
Peter Trinh Avery/The Craftsman Bar
and Kitchen
Board Members
Daniel Abramson RAND Corporation
Matthew Allnatt
Jonathan Club Alisha Auringer LAcarGuy Judy Barker Barker Hanger Barbara Bishop BBPR, Inc.
Gauri Brienda-Ramnath A Day in LA Tours
Julia Cooksey
Frontier Communications
Kiersten Elliott Santa Monica College
Colby Goff
Rustic Canyon Family Jeff Klocke Pacific Park on the Santa
Monica Pier Mitchell Kraus Capital Intelligence Asso-ciates
Board Members, Cont. Bob Kull
The Lobster Restaurant
Tim Kusserow Carlthorp School
Leonard “Len” Lanzi
Los Angeles Venture Association
Richard Lawrence National Bank of California
Paul Leclerc
Le Meridien Delfina Gary Loeb Chezgal Merchandising Creations John Loyacono Bank of America Sara Mailloux
Hulu
Brian Mac Mahon Expert Dojo
Jennifer McElyea
Watt Investment Partners
Pat McRoskey The Water Garden
Greg Morena
The Albright Restaurant Evan Pozarny Muselli Commercial Realtors Susan Gabriel Potter Bob Gabriel Insurance Dave Rand Armbruster Goldsmith & Delvac
Scott Schonfeld Linwood Ventures
Camille Strickland
Orthopaedic Institute for Children Nat Trives
Coalition for Engaged Educations
Juan Viramontes Georgian Hotel
John Warfel
Metropolitan Pacific Real Estate
David Woodbury Arthur Murray Dance Studio.
September 25, 2017
Santa Monica City Council
1685 Main Street, Room 209
Santa Monica, CA 90401
Re: Item 4-B Economic Sustainability Strategy
Dear City Council Members,
The Chamber is thrilled that the city is taking the
long-view of our community’s economic future. We en-
courage you to develop the proposed long-term economic
sustainability strategy, and hope you will take the following
points into consideration when determining the scope of the
plan:
While some aspects of our future economy may be
difficult to predict, others like the “needed changes in the
City’s processes, policies, regulations, and infrastructure”,
referenced in part 2(c) of the Discussion section of the staff
report, may be easier to identify now. Organizations like the
Chamber, the BIDs, and Santa Monica Travel & Tourism,
would be important partners in this conversation.
Santa Monica’s growing technology sector “Silicon
Beach” employs over 25,000 people (28% of the city’s total
employment). We encourage you to engage technology rep-
resentatives in the development of the strategy. In particu-
lar, how can we should encourage startups that begin in San-
ta Monica, to stay here as they grow?
The impact of our regional housing shortage crisis is
making it increasingly difficult for our local workforce to
live in, or near, Santa Monica. We believe this is one of the
most critical challenges that should be addressed in the eco-
nomic sustainability strategy.
We look forward to being part of this important
strategic planning effort, and we thank you for your consid-
eration of our suggestions.
Sincerely,
Laurel Rosen
President / CEO
Santa Monica Chamber
Item 4-B
9/26/17
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Vernice Hankins
From:Mary Marlow <mmarlow7@icloud.com>
Sent:Tuesday, September 26, 2017 4:22 PM
To:councilmtgitems; Terry O’Day; Pam OConnor; Gleam Davis; Kevin McKeown Fwd; Ted
Winterer; Tony Vazquez; Sue Himmelrich
Cc:mmarlow7@icloud.com; Rick Cole; David Martin; Andy Agle
Subject:Agenda Item 4B
Mayor Winterer and City Council Members,
Experience tells us that economic and technology forces that were not anticipated, nor planned for, have more
to do with the fortunes of cities across the country than thoughtful planning. According to the latest city budget,
about 24% of city revenues come from “services”, yet the staff seems to focus on an anticipated decline in
“sales tax”, which is about 19% of the city’s revenue. I would like to see how the current plans for example,
Sustainability, Development, Creative Capital, and Capital Expenses would affect our economic future by
creating an implementation plan with estimated financial outcomes for all the plans approved. I think a careful
ongoing examination of the impacts of our priorities as codified in current plans will provide a better future
roadmap than guessing what disruptions may come. As disruptions and priorities change, the financial impacts
of adjusting current plans could be anticipated and estimated, allowing the city to move nimbly through
constant change.
Please consider the Bergamot Area Plan approved in 2013 as an example. The housing crunch in all of
California may require an adjustment to the 60% commercial/40% housing split that seemed workable in
2013. How would additional housing in the Bergamot Area impact services revenue? Property taxes? Sales
taxes? Utility taxes?
Plans made during the 6 years of the Downtown Community Plan process have already been adjusted for new
known technologies and changes to communications and transportation that will continue to require adjustment
as we move into an unknown future together. The City has wisely anticipated adjustments in the LUCE,
Downtown Plan, Bergamot Plan, Bike Plan, Pedestrian Plan, Safe Routes to Schools, etc. in recognition of the
ongoing pace of change. In fact, change is built into all our current plans, but financial projections are
not. Please consider ongoing financial projection yearly reports, based on actual plans, as a necessary addition
to the city’s economic outlook instead of guessing what comes next with or without “expert” input.
Thank you for considering my thoughts on this important issue.
Mary Marlow
Ocean Park Resident
Item 4-B
9/26/17
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Item 4-B
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Strategy for Long-Term
Economic Sustainability
Santa Monica City Council
September 26, 2017
“It’s tough to make
predictions, especially
about the future.”
-Yogi Berra
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LA County So Cal State Santa Monica
Picto of data and trends
1. Go forward?
2. Scope?
3. Council involvement?
4. Community
participation?
5. Institutions and
partners?
6. Resources?
7. How to begin?
1.Go forward?
2.Scope?
3.Council involvement?
4.Community participation?
5.Institutions and partners?
6.Resources?
7.How to begin?