To: Economic Development Advisory Commission                          Date: February 12, 2007

From: Brian Moura, Assistant City Manager/Acting Economic Development Manager

Subject: East Side and City-Wide Economic Development Priorities, Strategies & Principles

Background

During one of EDAC’s discussions of Potential Agenda Topics for future meetings, the Commission asked Staff to schedule the topic of East Side and City-Wide Economic Development Priorities, Strategies & Principles on a future EDAC Agenda. The discussion of that item will be on the February 15, 2007 EDAC Meeting Agenda.

To assist the EDAC Commission Members with this discussion, Staff felt it would be helpful to prepare a review of some of the major topics and key EDAC comments on these topics over the last several months. This is not meant to be a complete list but rather a resource that the Commission can use to help start the discussion of this topic. It may be the case that some of these topic areas and comments might be the starting point for one or more EDAC recommendations or statement of priorities, strategies and principles.

Major EDAC Discussion Areas

Here is a list of the EDAC Discussion Areas that the Commission may wish to review. They have been arranged by topic area, a brief overview of the topic and then some highlights of the Commission’s comments and observations.

What is Economic Development?

The Commission asked Staff to present some material on the definition and meaning of Economic Development. This discussion covered both the topic of Economic Development in general and how it has been implemented in the past in San Carlos as well as what could occur in the future.

EDAC Comments and Observations:

· Economic Development brings and retains desirable businesses and jobs to the City

· Economic Development promotes a healthy business climate

· Economic Development can bring additional revenue to the City to support desired City services and Capital Improvement Projects

· Past successes include the Downtown Facade Loan Program, converting the former Corp Yard to Workforce Housing, converting the former Sewer Plant to revenue producing uses (Izzy’s Steak House, Fairfield Suites, Burger King) and upgrading the former Denny’s Restaurant to a Trader Joe’s store.

Presentation on City Budget, Revenues & Finances

In December, EDAC heard a presentation by Administrative Services Director Jeff Maltbie on the City Budget, Revenues and Finances. City revenues are growing by a modest amount (3% to 4% per year) while operating expenses in some areas (Fire Department, Legal Expenses) are growing at a faster rate (a 9% increase this year in Fire; an increase up to 17% or $1.2 Million per year is proposed for the Fire Department budget in the coming year).

Several big ticket Capital Projects and Expenses are also on the horizon in the budget (Sports/Field Complex = $20 Million; Solve All City Flooding = up to $40 Million; Upgrade Existing Athletic Fields = $1 to $2 Million per field times 7 current fields); Fire Department Unfunded Liabilities = City Share of $18 Million). To address the past year operating budget deficit of $2.5 Million, the City Council adopted budget cuts in all but two departments (Fire & Legal) and deleted seven positions (Deputy City Manager, Finance Director, Human Resources Director, Police Traffic Sergeant, Police Services Technician, Public Works Administrative Assistant and Parks Maintenance Worker). The Police Department Communications and Dispatch function was combined with the same function in Menlo Park to save money in the General Fund of both cities.

EDAC Comments and Observations:

· EDAC members would not like to see more cuts in the City’s programs in the future

· A strong Economic Development program would help meet that goal

· The state of the City’s budget showed the need for more work on Economic Development in San Carlos

· How does the City plan to pay for some of the high cost projects being discussed?

· Concern about how future revenue measures such as another Fire Assessment measure would have on the City’s business climate

· Economic Development is important since it provides a way to fund some of these increased costs and projects without raising fees and taxes on residents and business

Market Study and 4 Potential Economic Development Strategies

EDAC has worked closely with Staff on an update of the Real Estate Market Study prepared by Bill Lee and his staff at Economics Research Associates (ERA). This is one of a series of such analyses prepared by ERA for San Carlos over the last 20 years. The reports integrate the aspirations of the community with economic opportunities.

The City’s main short term economic development opportunity is in the Retail Market and a few years later some Hotel development with opportunities in areas such as Office Space and R&D/Flex primarily coming several years later. ERA outlined 4 key Economic Development strategies that they believe the City should pursue based on the report’s findings:

1. Reinforce the concentration of construction related businesses on the Eastside in the area bounded by Old Country Road, Industrial Road, Terminal Way and Bing Street.

2. Encourage medium to larger floor plate retail redevelopment in the corridor along Industrial Road from opposite the parcel designated for hotel use at Holly Street and Industrial Road, along Industrial Road next to Highway 101 to the off-ramp of Highway 101 at Brittan Avenue and Industrial Road.

3. Use the City’s properties at Wheeler Plaza to create a landmark town center project.

4. Explore the transition of the Shoreway Road Area to a concentration of biotechnology uses.

EDAC Comments and Observations:

• Hotel development is appealing since it generates low amounts of traffic yet can be very financially rewarding for the City
• The City should review the 4 potential Economic Development strategies in the report