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SR 09-11-2018 8A City Council Report City Council Meeting: September 11, 2018 Agenda Item: 8.A 1 of 11 To: Mayor and City Council From: Andy Agle, Director, Housing and Economic Development Subject: Issuance of a Request for Proposals (RFP) to Select Experts to Develop a Strategy for Long-Term Economic Sustainability Recommended Action Staff recommends that the City Council authorize the issuance of a request for proposals (RFP) in order to identify and select a team of experts to help develop a long - term economic sustainability strategy for the City. Staff would return to Council for authorization to enter into a professional services contract with the recommended proposer(s). Executive Summary As a coastal city surrounded on three sides by the City of Los Angeles, Santa Monica provides not only the attractions of beach access, but also the services, amenities, and economic opportunities that make it a much-desired place to live, work, learn, and visit. To ensure that Santa Monica’s economic base – and the opportunities, services, and infrastructure it supports – remains healthy long into the future, the City must anticipate and plan for the technological and economic changes ahead. Previous generations of forward-thinking leaders built and implemented strategies to sustain Santa Monica’s infrastructure and services consistent with community values while supporting the City’s economic drivers of the retail, tourism, and professional and creative sectors. With similar thoughtfulness and forethought, the City and community must now determine how to preserve Santa Monica’s unique assets while adapting to rapid changes affecting the economy on a local and global level. After months of research and dialogue, staff has identified several emerging themes related to exponential global changes in artificial intelligence, user options, and connectivity, which will have major local impacts on work, transportation, and retail. By fostering a proactive strategy to address the opportunities and threats caused by these 2 of 11 disruptive forces, the City will be well positioned to adapt to the changes while continuing to support what makes Santa Monica special. In order to advance the strategic planning process, staff recommends that the City engage a team of experts to support the City’s efforts to develop a long-term economic sustainability strategy pursuant to the themes that emerged from the initial research and dialogue. Background On September 26, 2017 (Attachment A), Council held a study session to discuss the potential need for developing a strategy to support Santa Monica’s long-term economic sustainability. The study session identified how globalization and changes in digital communication, a shifting retail landscape, vehicle advancements, and the automation of jobs may broadly affect Santa Monica’s economic base (within the larger context of the Southern California economy). Council agreed to devote time and resources to developing a long-term economic sustainability strategy. Although Council did not identify a specific scope, it emphasized that the City should initially look broadly at the various types of anticipated external changes and technological advancements, and at a minimum, beyond the next 10 years. Following the September 26 Council meeting, staff convened an internal working group among the City Manager’s Office, Housing and Economic Development, Finance, and Planning and Community Development to begin gathering research, discuss approaches for the project, and start to consider opportunities and threats. On December 5, 2017 (Attachment B), staff returned to Council with a recommended two- phased approach for narrowing down the project’s scope and building a strategy with:  Phase I: Conduct research and host panel discussions to identify priority areas for the scope of the project.  Phase II: Develop a strategy that addresses top priorities with participation by Council, community members, organizational partners, experts, and a multidisciplinary staff team. 3 of 11 Council approved the recommended approach on December 5, 2017. To determine which potential changes to prioritize in developing a long-term economic sustainability strategy, staff used the following considerations:  What is the level of risk to Santa Monica?  What is the level of opportunity for Santa Monica?  What will have the most impact on Santa Monica’s economy?  How likely is it that the change or advancement will occur?  Is this change or advancement something that the City can realistically respond to? Staff’s research and analysis also recognized the current strengths of the local economy, including Santa Monica’s leading sectors: creative and techn ology (aka “Silicon Beach”); health care; hospitality and tourism; and retail. Santa Monica is currently home to 92,478 residents; 9,471 businesses; and 88,498 employees. Staff relied on the following resources for research during Phase I:  Academic, consultant, and news reports: Staff explored reports and articles projecting how potential changes may affect cities and recommending ways in which the public and private sectors could respond. See Attachment C for a list of resources.  Conferences and educational events: Staff attended more than 9 events focused on technological advances and economic forecasts. For example, staff attended the University of Oregon 2018 Urbanism Next Conference, the Los Angeles Economic Development Corporation (LAEDC)'s 2018 Economic Forecast and The Future of Work in LA County "Future Forums," and the 2017 California Economic Summit. 4 of 11  Existing City documentation and regional reports: Staff compiled economic data from City reports and plans, including the Framework, Wellbeing I ndex, Land Use and Circulation Element, Downtown Community Plan, Sustainable City Plan, Strategy for a Sustainable Local Economy, and Creative Capital Plan. Staff also gathered economic information from regional organizations like the Southern California Association of Governments (SCAG), UCLA Anderson Forecast, and LAEDC.  Organizational partners: Staff met with local economic partners like the Santa Monica Chamber of Commerce, Downtown Santa Monica, Inc., and Santa Monica Travel & Tourism. The City also coordinated panel discussions among thought leaders in innovation and economics to discuss how emerging trends and technologies may affect Santa Monica’s economy in the long term.  On February 1, 2018, the City collaborated with the Santa Monica Chamber of Commerce for the annual State of the City event, which spotlighted economic sustainability. The program included the City Manager moderating a panel among Debs Schrimmer, Senior Transportation Policy Manager for Lyft, and Dr. Sabrina Kay, a local Santa Monica entrepreneur. Ms. Schrimmer shared Lyft’s excitement for a future of multimodal transportation, while cautioning that advancements like autonomous vehicles will likely add to congestion in the absence of thoughtful planning and policymaking. Dr. Kay celebrated Santa Monica as a place that does well in cultivating innovation, and she suggested that the rate of technological change today is greater than any time in human history. She stressed the importance of ongoing investment in education and workforce development. The City Manager also emphasized that we are in an incredible time of change and disruption, and he urged the community to participate in building a strategy that safeguards Santa Monica’s long-term 5 of 11 economic vitality. To view a recording of the entire program, visit the City's YouTube channel.  On June 5, 2018, the City hosted a day of events around the topic of “Disruption and the Economy,” which culminated in an evening public panel discussion at the Santa Monica Main Library. The featured speakers were Dr. Michael Storper, Professor at UCLA; Gabe Klein, co-founder of CityFi and former director of the Chicago and Washington, DC Departments of Transportation; Becky Steckler, AICP, Program Manager at University of Oregon’s Urbanism Next initiative; and Dr. Manuel Pastor, Professor at USC. Dr. Storper explained that to support a thriving economy in a time of innovation and disruption, cities must have dense employment centers, ample opportunities for interaction at and around work, efficient transportation, and residential and commercial affordability. Klein described how investment in multimodal transportation networks are critical for economic development, along with creating places that are convenient for walking and gathering. Steckler illustrated the ongoing shifts in retail as people shop online more and expect to combine useful or meaningful experiences with purchasing activities at brick-and-mortar stores. Dr. Pastor underscored the importance of building equity to not only achieve social justice, but to also support sustained employment and economic growth. A summary of the presentations and panel discussion, as well as a summary of a workshop among the presenters and senior City staff, is provided as Attachments D and E. For a recording of the entire panel discussion, visit santamonica.gov/EconomicFuture. Based on research and expert panel discussions during Phase I , staff has categorized three key transformational trends affecting people and cities globally. They are:  AI: Computers are getting better at: learning without explicit programming, performing physical tasks that require adaptability and agility, and making people and capital more productive. 6 of 11  User Options: Costs to offer customized products, services, and experiences, continue to diminish, and more options are available to users across sectors than ever. With rapidly improving convenience and accessibility, people are adopting new advances faster.  Connectivity: People continue to grow more connected to one another, as well as to goods and services, through improvements in technology, transportation, and infrastructure. With respect to Santa Monica’s economy, staff anticipates that these interrelated, underlying global trends will have significant impacts on work, transportation, and retail, as summarized below (see Table 1. below for an outline illustration):  Work: As computers and robots increasingly take on simple and repetitive tasks, there will be a heightened emphasis on human-driven creative and complex tasks. In a highly connected world with flexible careers, work projects, and office spaces, the fluid nature of work will also persist. To help the workforce adapt to rapid changes in artificial intelligence, user options, and connectivity, responsive education and training will be critical in matching people to jobs.  Transportation: Developments in AI and machine learning, plus new technologies that digitally connect vehicles and mobility options, make the deployment of autonomous and connected vehicles seem quite likely, and the need for electrification and sharing even more important. Transportation network companies (TNCs) and fleet-based services that offer alternatives to car ownership and single-occupancy car trips are expected to become more ubiquitous. As innovations create transportation options that complement and/or compete with existing modes, public agencies will have to adopt new policies and strategies to avoid projected increases in congestion and greenhouse gas emissions, and deliver efficient and equitable mobility. There will also be more opportunities to partner with private organizations to offer a menu of 7 of 11 transportation options to travelers, as Santa Monica is currently witnessing with Big Blue Bus and Lyft partnering on the "Dial a Ride" service delivery.  Retail: With the proliferation of shopping and purchasing options, consumer behavior and expectations from retail experiences will continue to evolve. With the aid of AI and more streamlined distribution networks, companies will be able to seamlessly promote and deliver tailored purchase experiences that start online and end at the customer’s doorstep. E-commerce will have the capacity to fulfill most commodity purchases, which means that customers will be in search of unique experiences and local products from brick-and-mortar stores. Pivoting towards experiential shopping strategies may help brick-and-mortar stores that are facing existing industry pressures from oversaturation of retail space and competition with e-commerce. In this context, demand for delivery trips will grow exponentially, making it ever more important to determine how goods get to and through the community safely, sustainably, and efficiently. Table 1. Potential Economic Changes AI Options Connectivity Human emphasis on creative, complex tasks X Flexible careers, projects, and work spaces X X Training to anticipate rapidly evolving job market X X X Autonomous vehicles X X TNCs and fleet-based services X X X More opportunities for public-private partnerships X X Changing shopper behavior and expectations X X E-commerce X X X Added pressure on goods movement X X X Underlying Global Trends Wo r k Tr a n s p o r t a t i o n Re t a i l 8 of 11 It will be important to anticipate and evaluate these potential economic changes with respect to the City's seven Framework outcome areas: Community, Economic Opportunity, Health, Learning, Place & Planet, Safety, and Governance. There are other types of external changes and technological advancements that are expected to affect Santa Monica in the long term. Examples include drought conditions, virtual experiences, sea-level rise, and broad demographic changes. See Attachment F for an overview of potential changes and their expected relation to the future of Santa Monica’s economic base. While these additional changes will undoubtedly affect Santa Monica, staff did not assess their impacts on the local economy as high as the impacts illustrated above in Table 1. Nonetheless, the City will need to understand holistical ly how all the changes will interact with one another to shape opportunities and threats within the community. Finally, there is a physical and geographic dimension to these cross -cutting economic transformations. Just as the coming of the automobile and later the 10 Freeway reshaped or the relocation of Douglas Aircraft reshaped Santa Monica’s economic landscape in ways that changed the lay-out and life of the city, the new factors will undoubtedly do the same. In a world where global capital and commerce is producing greater homogeneity, a vital part of Santa Monica’s future prosperity lies with retaining and strengthening what is unique and distinctive about our community as competitive advantages. Moreover, public infrastructure investments in transportation, parks, schools, and other facilities by regional agencies (like Metro and the County) and local (the City, School District and Santa Monica College) can be a source of leverage to capitalize on economic changes in ways that not only improve our local standard of living, but support a diverse and inclusive community and enhance community quality of life. Just as projects like the Third Street Promenade, Pier restoration and the Colorado Esplanade were catalytic investments in Santa Monica’s econo mic future, potential projects such as capping portions of the 10 Freeway and transformation of the Santa Monica Airport into a 250 acre natural, recreational, educational and cultural park setting can contribute to and complement the City’s economic sustainability strategy. 9 of 11 This “placemaking” dimension of the strategy can provide a practical guide for future public investment to promote a prosperous and livable community. Phase II Process Staff recommends issuing a Request for Proposals (RFP) to enlist a team of experts to help develop a long-term economic sustainability strategy based on the Phase I discussions and priorities. The team of experts would ideally represent partners from interdisciplinary fields and provide access to people and information that would help the City sharpen its understanding of how to position itself and plan in the context of exponential global changes. The team of experts would be expected to:  Collect input from residents, community members, local thought leaders, researchers, and partners.  Inventory external threats and opportunities, and internal strengths and weaknesses.  Explore potential local market opportunities.  Identify best practices for the City to nimbly respond to future disruptions.  Recommend governing, legislative, and community implementation approaches.  Ensure that the strategy reflects the City’s Framework as well as local values, goals, and priorities.  Consider how to support future investments in planned and desired local infrastructure and placemaking, which in turn could bolster sustained economic prosperity. Example projects include: water sustainability, the future “great park” envisioned for the Santa Monica Airport, transit improvements, Memorial Park, Gateway Master Plan, Complete Streets, Vision Zero, and City Yards Modernization. Staff would prepare an RFP that seeks proposals from the private sector, nonprofits, and educational institutions. Rather than a traditional consulting contract, the RFP is hoped to result in a public-private partnership (PPP) that could provide services and 10 of 11 work products that are tailored to the City’s needs as well as the needs of society as a whole. A PPP could serve as a vehicle to mobilize resources and develop innovative and flexible ideas and solutions that cut across sectors by capitalizing on the expertise of private, nonprofit, or educational partners. The RFP would be clearly designed, and partners recommended in a manner that aligns the objectives of all parties, who would be highly interested in the success of the project and its value to the broader community. Alternative Approaches While staff recommends enlisting a team of experts, Phase II could focus on alternative approaches, including:  Council subcommittees: Council could appoint subcommittees among its membership to delve into the recommended priorities to make recommendations for a long-term economic sustainable strategy. However, such an approach may limit the City’s opportunity to engage community members as well as specialists who can provide expertise in upcoming technological and economic changes.  Staff preparation of the economic sustainability strategy: Given the City’s existing priorities and operations, allocating staff time to prepare a strategy in - house would require a significant reallocation of priorities or hiring additional staff for a short-term project. Such an approach could also limit the City’s ability to take advantage of the understanding and access to information that is available to experts in the associated fields. Next Steps With Council’s approval, staff would issue an RFP to recruit a team of experts. Staff anticipates that the experts would begin working in late 2018 or early 2019. Early efforts are expected to include an evaluation of the City’s Framework and local goals and 11 of 11 priorities relative to economic sustainability opportunities and threats, an assessment of the City’s current policy approaches and practices with respect to economic development and adaptation, and initial conversations with community members, local thought leaders, researchers, and local partners. Financial Impacts and Budget Actions Authorizing solicitation of applications does not have financial impacts. Staff will return to Council for authorization to enter into a professional services contract(s). Prepared By: Julie Wedig, Management Fellow Approved Forwarded to Council Attachments: A. September 26, 2017 Staff Report (WebLink) B. December 5, 2017 Staff Report (WebLink) C. Economic Sustainability Resources D. June 5 Evening Panel Notes E. June 5 Leadership Meeting Notes F. Economic Sustainability Evaluation of Future Changes Attachment C City of Santa Monica Economic Sustainability Initiative List of Resources Autonomous Vehicles and the Future of Parking (Rep.). (2016). Nelson\Nygaard, Perkins + Will. Retrieved from http://nelsonnygaard.com/wp- content/uploads/2017/04/AutoVeh_FutureParking_FINAL.pdf Autonomous Vehicle Policy Framework Summit – Final Product Report  (Rep.). (2018). Los Angeles, CA: Transpo Group. Retrieved from http://www.transpogroup.com/assets/autonomousvehiclepolicyframeworksummit_finalpr oductreport.pdf Bot.Me: A revolutionary partnership: How AI is pushing man and machine closer together (Rep.). (2017). PwC. Retrieved from https://www.pwc.com/us/en/services/consulting/library/consumer-intelligence- series/artificial-intelligence.html Carlson, G., & Larco, N. (2017). Re-Imagining Retail (Report). University of Oregon – Urbanism Next. Retrieved from https://cpb-us- e1.wpmucdn.com/blogs.uoregon.edu/dist/f/13615/files/2017/06/Re-Imagining-Retail-Urb- Next-SCI-Carlson-Larco-2017-yz1xdh.pdf Carlson, G., & Larco, N. (2017). Warehousing (Report). University of Oregon – Urbanism Next. Retrieved from https://cpb-us- e1.wpmucdn.com/blogs.uoregon.edu/dist/f/13615/files/2017/06/Warehousing-Urb-Next- SCI-Carlson-Larco-2017-19ymhh6.pdf Carr, A. (24, November 2017). The Future of Retail in The Age of Amazon. Fast Company. Retrieved from: https://www.fastcompany.com/40491567/the-future-of-retail-in-the-age- of-amazon Clark, B., Larco, N., & Mann, R. (2017). The Impacts of Autonomous Vehicles and E-Commerce on Local Government Budgeting and Finance (Report). University of Oregon – Urbanism Next. Retrieved from: https://cpb-us- e1.wpmucdn.com/blogs.uoregon.edu/dist/f/13615/files/2017/07/Impacts-of-AV- Ecommerce-on-Local-Govt-Budget-and-Finance-SCI-08-2017-2n8wgfg.pdf Davidson, T., & Webber, M. (2017, October 16). If You Drive Less Than 10,000 Miles a Year, You Probably Shouldn't Own a Car. CityLab. Retrieved from https://www.citylab.com/transportation/2017/10/if-you-drive-less-than-10000-miles-a- year-you-probably-shouldnt-own-a-car/542988/ Desouza, K. C., & Fedorschak, K. (2015, July 7). Autonomous vehicles will have tremendous impacts on government revenue. Retrieved from https://www.brookings.edu/blog/techtank/2015/07/07/autonomous-vehicles-will-have- tremendous-impacts-on-government-revenue/ Driverless Future – A Policy Roadmap for City Leaders (Rep.). (2017). Arcadis; HR&A; Sam Schwartz. Retrieved from https://driverlessfuture.webflow.io/ Florida, R. (2017, September 28). For a Strong Economy, Focus on Inclusive Growth. CityLab. Retrieved from https://www.citylab.com/equity/2017/09/the-how-and-why-of-inclusive- growth/541422/?utm_source=SFFB Horton, M., De La Cruz, C., Karo, C., & Simon, R. (2017). California Summit Review: An Action Plan for Growth and Innovation (Publication). Milken Institute. Retrieved from https://www.milkeninstitute.org/publications/view/855 Kasriel, S. (2017, December 5). 4 Predictions for the Future of Work. Retrieved from https://www.weforum.org/agenda/2017/12/predictions-for-freelance-work- education/ Larco, N. (2018, July). The Urbanism Next Framework. Retrieved from https://urbanismnext.uoregon.edu/2018/07/05/the-urbanism-next-framework/ Lewis, M. (2017, November 21). How Will Retail Impact the Street Life of our Future Cities? [Web log post]. Retrieved from https://sidewalklabs.com/blog/how-will-retail-impact- street-life-future-cities/ Los Angeles County Strategic Plan for Economic Development 2016-2020. (Report). (2016). Propel L.A. Retrieved from: https://laedc.org/strategicplan/ Marshall, A. (2017, October 30). How to Design Streets for Humans-and Self-Driving Cars. Retrieved from https://www.wired.com/story/nacto-streets-self-driving-cars/ Mitra, S., Sanchez, L., Sedgwick, S, De Anda, R., & Madrigal, J. (2017, October). L.A. & Orange County Community Colleges: Powering Economic Opportunity (Report). Center for a Competitive Workforce. Retrieved from https://laedc.org/2017/10/03/ccw-report/ Nedelkoska, L., & G. Quintini (2018). Automation, skills use and training. OECD Social, Employment and Migration Working Papers, No. 202, OECD Publishing, Paris. Retrieved from http://dx.doi.org/10.1787/2e2f4eea-en Pastor, Dr. M. (2018, February 21). Growing the Middle: Securing the Future of Los Angeles. Presented at the LAEDC Economic Forecast. Retrieved from https://laedc.org/wp- content/uploads/2018/02/Pastor_LAEDC_Shrinking_Middle_Class_2018_v_01.pdf Pinsker, J. (2017, September 14). The Future of Retail Is Stores That Aren’t Stores. The Atlantic. Retrieved from: https://www.theatlantic.com/business/archive/2017/09/future- retail-experiences-juice-bars/539751/ Progress Report: OneNYC 2017 (Rep.). (2017). New York, NY: The City of New York - Mayor Bill de Blasio. Retrieved from http://onenyc.cityofnewyork.us/wp- content/uploads/2017/04/OneNYC_2017_Progress_Report.pdf Purdy, M., & Daugherty, P. (2016). Why Artificial Intelligence is the Future of Growth (Publication). Accenture. Retrieved from https://www.accenture.com/t20170927T080049Z__w__/us-en/_acnmedia/PDF- 33/Accenture-Why-AI-is-the-Future-of-Growth.PDFla=en Rainwater, B. (2018, February 8). Cities, Innovation, and the Growth of the Digital Economy [Web log post]. Retrieved from https://citiesspeak.org/2018/02/08/cities-innovation-and- the-growth-of-the-digital-economy/?utm_campaign=editorial- content&utm_medium=email&utm_source=informz&utm_content=weekly- 021018&utm_term=text-internet-report Smart Cities – How rapid advances in technology are reshaping our economy and society (Rep.). (2015). Deloitte. Retrieved from https://www2.deloitte.com/content/dam/Deloitte/tr/Documents/public-sector/deloitte-nl- ps-smart-cities-report.pdf Taming the Autonomous Vehicle – A Primer for Cities (Rep.). (2017). Bloomberg Philanthropies; The Aspen Institute. Retrieved from https://www.bbhub.io/dotorg/sites/2/2017/05/TamingtheAutonomousVehicleSpreadsPDF .pdf Technology, Jobs, and the Future of Work (Rep.). (2016). McKinsey Global Institute. Retrieved from https://www.mckinsey.com/~/media/McKinsey/Featured%20Insights/Employment%20an d%20Growth/Technology%20jobs%20and%20the%20future%20of%20work/MGI- Future-of-Work-Briefing-note-May-2017.ashx Trends in Smart City Development (Rep.). (2016). National League of Cities. Retrieved from https://www.nlc.org/sites/default/files/2017- 01/Trends%20in%20Smart%20City%20Development.pdf The Future of Retail: 8 key predictions [Web log post]. World Retail Congress. (2016). Retrieved from https://www.worldretailcongress.com/news/future-retail-8-key-predictions The UCLA Anderson Forecast for the Nation and California (Vol. September 2017, pp. 51-58, Rep.). (2017). Los Angeles, CA: UCLA Anderson Forecast. Retrieved from https://www.anderson.ucla.edu/centers/ucla-anderson-forecast/september-2017- economic-outlook Tomer, A. & Puentes, R. (2014, April 23). Getting Smarter About Smart Cities. The Brookings Institution. Retrieved from https://www.brookings.edu/research/getting-smarter-about- smart-cities/ Woetzel, J. (McKinsey & Co.) (2018, February 21). Global Forces. Presentation at the LAEDC Economic Forecast. Retrieved from https://laedc.org/wp- content/uploads/2018/02/LAEDC-Econ-Forecast-Presentation.Feb21.2018_Jonathan- Woetzel.pdf Workforce of the future - The competing forces shaping 2030 (Rep.). (2017). PwC. Retrieved from https://www.pwc.com/gx/en/services/people-organisation/publications/workforce-of- the-future.html Attachment D City of Santa Monica Economic Sustainability Initiative A Day on Disruption and the Economy A Discussion on Disruption and the Economy (Evening Panel) Santa Monica Public Library, June 5, 2018 On the evening of June 5, 2018, the City hosted Dr. Michael Storper, Professor at UCLA; Gabe Klein, co-founder of CityFi and former director of the Chicago and Washington, D.C., Departments of Transportation; Becky Steckler, AICP, Program Manager at University of Oregon’s Urbanism Next Initiative; and Dr. Manuel Pastor, Professor at USC. Each speaker presented their thoughts on how cities should best prepare for the next economic disruption. To watch the panel discussion, please visit: https://youtu.be/U31qReq25YM Dr. Michael Storper Dr. Storper explained that to support a thriving economy in a time of innovation and disruption, cities must have dense employment centers, ample opportunities for interaction at and around work, efficient transportation, and residential and commercial affordability. Greater Los Angeles: Dr. Storper pointed out that unlike the San Francisco Bay Area, regional fragmentation of city leadership in Greater Los Angeles led to lack of planning for the economic disruption during the 1970’s. In the Greater Los Angeles region, this has created:  An unfocused economy  Low residential and employment density  Lower investment in transit infrastructure per person Dr. Storper suggested that the Greater Los Angeles region needs to focus on creating more high-skilled job clustering, transit infrastructure, and denser neighborhoods. Santa Monica: Dr. Storper pointed out that Santa Monica has done well compared to rest of the region by investing in local infrastructure, denser neighborhoods, and employment areas. To remain ahead, Dr. Storper recommends that Santa Monica:  Continue creating neighborhoods with different densities  Promote experiential retail experiences closer to dense employment spaces Gabe Klein Gabe Klein described how investment in multimodal transportation networks are critical for economic development, along with creating places that are convenient for walking and gathering. He began his talk by asking three questions:  What kind of cities do we want to live in?  What kind of infrastructure will we need?  Why are our policies at odds with our needs? These three questions can help cities process decisions as they prepare for future innovation and disruptions. Transit infrastructure: Klein states one of the biggest problems in the United States is that we do not link transit investments to real estate. Transit in the United States is seen as a necessary “social safety-net and spend” that must be made. Klein suggested that transit investments need to be combined with land use like in Hong Kong and Singapore. Dense, walkable communities: Klein described how it is important to create dense, walkable neighborhoods by organizing communities into nodes with, for example, a doctor’s office, grocery store, and community center. This would reduce reasons why people have to travel away from their communities Preparing for the Future: Klein believes that the future of automation means people are going to be working less and governments need to prepare for this future. Local governments can either drive change, shape the change, or do nothing. Either way, change will occur, but if local governments do nothing they will miss out on the opportunity to drive or shape the change. Klein believes that in order for cities to prepare for the future, they must ask:  What is the business model?  What is the technology?  What is the public policy? Becky Steckler, AICP Steckler focuses her analysis around changes to city form and development in relationship to autonomous vehicles, e-commerce, and rideshare. Steckler illustrated the ongoing shifts in retail as people shop online more and expect to combine useful or meaningful experiences with purchasing activities at brick-and-mortar stores. Technological adoption: Steckler described how technology is being adopted at a faster pace than it was in the past. A few examples she described included:  September 2016 - Testing of autonomous vehicles started in Pittsburgh and Singapore.  November 2017 - Black Friday purchases online outnumbered brick and mortar sales.  January 2018 - Waymo announced they will roll out level 4 AVs (fully autonomous vehicles). These technological changes will significantly impact how cities invest in infrastructure and will have financial implications for cities that do not understand the changing city form and landscape. Automation as catalyst for change: Steckler views automation as a catalyst for cities to begin rethinking how they will operate and how they will integrate technology into future infrastructure. Steckler emphasizes that cities need to understand how technological changes will affect land use, urban design, transportation, and real estate. According to Steckler, cities will have to look at outcome measures. Urbanism Next focuses on equity, health, the environment, the economy, and governance. Dr. Manuel Pastor Dr. Pastor underscored the importance of building equity to not only achieve social justice, but to also support sustained employment and economic growth. Equity and economic prosperity: Dr. Pastor focused on how cities must pay attention to the questions of equity, inclusion, and fairness, since these are central to sustainable prosperity overtime. He finds that areas with higher inequality, racial segregation, and metropolitan fragmentation, have a harder time sustaining economic growth. Steps to building equity: Dr. Pastor emphasized three aspects that cities must focus on to support an equitable future:  Drive the top: Investing and supporting the innovative industries that generate prosperity.  Grow the middle: How do we use the community college system to create the jobs in the middle, and how do we retrain people for jobs in the new economy?  Lift the bottom: Raise the minimum wage, create the conditions for unionization, and create programs for people reentering society after the justice system. Panel Discussion After individually presenting on their work, all four speakers participated in a panel discussion about people, space, and technology. Below is a summary of the discussion led by Dr. Storper. What are governments doing to prepare for the future? Steckler:  Regions need to start thinking about regional transit, land use, and development. o Ex: Portland Metro Region has a regulatory framework that forces everyone to work together.  Cities need to start thinking ahead by creating policies that integrate technological innovation. o Ex: Chandler, Arizona, thinking ahead by reducing parking minimums if developments account for autonomous vehicle pick-up and drop-off. Klein:  Cities and regions are starting to look at outcomes – for example, how does transportation contribute to CO2?  European countries focus on measuring happiness – this allows cities to invest in people through education, healthcare, and transportation.  In America, we are too focused on the idea of “freedom to do” – in other countries it’s about the greater societal good. Dr. Pastor:  Cities and regions need to start measuring and tracking equity as a part of government performance if they want to improve equity.  Need to invest in climate resistant infrastructure, build affordable and dense housing, and invest in education.  Need a social compact that welcomes newcomers and immigrants from all economic spectrums. How do you build the inclusionary coalitions for an equitable transition during future disruption? Steckler:  During periods of disruption, there will be pushback from people who are going to be negatively impacted by the change – need to focus on creating policies to mitigate the transition. Klein:  One city can influence the state, and the state can influence the nation. Santa Monica can lead locally and that will reverberate through the country. Dr. Pastor:  Problem of successfully implementing our utopian vision of the future – we have to put policies in place so that people are not fearful of economic changes. Santa Monica cannot be an island on its own, but Southern California is a highly fractured region. How does it push the larger region to focus on planning? Steckler:  Governments should provide more incentives for regions to coordinate together. Klein:  Fragmentation can be an advantage, because a small city like Santa Monica can do something radical, which can snowball into surrounding cities.  Santa Monica should be making radical changes with a regional impact in mind. Dr. Pastor:  While SCAG serves one of the most fragmented regions, Santa Monica should consider working with other forward-thinking cities like Long Beach. Closing thoughts: Steckler:  It’s important to have vision for the future, because that will help define what steps you take to reach goals that help you reach your vision. Klein:  The upcoming economic change provides us with new opportunity. We need a big paradigm shift in how we invest in our people, infrastructure, and future. Dr. Pastor:  There is a fear of change (economic, demographic) that has divided our country. We need to form new coalitions to reduce fear and embrace change together. Attachment E City of Santa Monica City of Santa Monica Economic Sustainability Initiative A Day on Disruption and the Economy Staff Leadership Meeting Santa Monica Main Library, June 5, 2018 On the afternoon of June 5, 2018, in advance of the Economic Sustainability public panel discussion, staff leaders from throughout the organization met with Dr. Michael Storper, Becky Steckler, Gabe Klein, and Mayor Pro Tem Gleam Davis. After discussing their respective areas of research and practice, the three guest speakers, as well as Mayor Pro Tem Davis, were divided among four breakout groups with staff leaders to respond to the following question: Q: Given the continued exponential growth in technology and globalism, what are the greatest long-term opportunities and threats related to Santa Monica’s economy? After brainstorming opportunities and threats, each breakout group ranked them by relevance and importance. The following summarizes each group’s top choices: Group A: 1. Santa Monica should focus on supporting experiential retail and the makers’ movement, given the threat of further corporatization of many elements of Santa Monica’s economy (retail, restaurants, entertainment) and the associated decline of local culture. 2. Technological and global changes could amplify the demand for housing in Santa Monica, increasing the risk that Santa Monica becomes an enclave only for the rich. Adding housing near transit could address vehicle congestion and housing affordability issues, but a wealthier community in the future may not accept the strategy. There may be opportunities to repurpose existing facilities for housing (e.g. parking facilities). Repurposing the revenue-generating facilities could, however, potentially risk the City’s funding for programs, services, and housing for lower-income residents. 3. Santa Monica’s beach could be an asset or a threat in the future. If residents lose the connection to the local beach, it could end up serving visitors only and no longer feel like an integral part of the community. Santa Monica needs to foster residents’ connection to the beach as one of our greatest local resources. Group B: 1. Santa Monica risks becoming an island of success that prices out innovators and innovation. Santa Monica needs to develop a strong foundation that supports taking risks. 2. Santa Monica should focus on land-use changes that increase connections and innovation. We should pursue land use and mobility strategies that mitigate the congestion bottlenecks that separate Santa Monica from the rest of the region. Our land-use plans should anticipate the next disruption. 3. Santa Monica needs to temper our fear of change that can lead to overregulation and undermine creativity, flexibility, and innovation. Group C: 1. Santa Monica must capitalize on its strong workforce and outstanding “brand” in order to continue our strength in the future economy. 2. In order to effectively address the changing economic landscape, alignment among local government institutions, residents, and businesses, will be necessary. 3. Changes in the economy could lead to greater housing affordability challenges, further income inequality, and declining livability for community members without significant resources. Equity needs to be a primary consideration in the future economy. Group D: 1. Resistance to disruption can result in missed opportunities. Rather, we need to harness technological and global changes to benefit our community. 2. Santa Monica should repurpose infrastructure that becomes obsolete, such as parking structures and lots, in order to achieve broader community goals like affordable housing, affordable work space, and replacement of lost revenues associated with obsolete infrastructure. Attachment F Potential Future Changes Relative to Santa Monica's Economy Potential Change Description Risk Opportunity Impact Likelihood Ability to Respond Work Intrinsic changes in the nature of work due to artificial intelligence and automation, increased user options, and greater connectivity, resulting in changing job demands, greater transience of work, and rapidly evolving job markets. H H H H M Transportation Significant changes in mobility options, including shared autonomous vehicles, that affect personal automobile ownership, parking demand, and roadway use.H H H H M Retail Critical changes in the retail environment due to changing shopper behavior, continued growth of e- commerce, and greater importance of goods movement, resulting in changes to shopping districts. H H H H M Drought Conditions Severe, prolonged drought, with water rationing affecting every facet of the economy. M M M H H Demographics Demographic changes resulting in evolving population needs and preferences. Exponential advances in biomedicine in particular, will allow people to live longer and with fewer disruptions to healthy living.M M M H M Sea Level Sea-level rise reduces the width of Santa Monica's beach and impacts some oceanfront properties. M L L H M Climate Global warming undermines Santa Monica's mediterannean climate and makes it less appealing to businesses, residents, and visitors.M L M H L Virtual Experiences Virtual reality simulations that allow people to travel from the comfort of their homes, resulting in a dramatic decline in visitation. Digital meetups that negate the need for physical workspaces. M L H L L Key H: High M: Moderate L: Low