Agenda Item No. 10
CITY COUNCIL STAFF REPORT
TO: Honorable Mayor and City Council DATE: October 15, 2024 FROM: Matthew Bronson, City Manager
PREPARED BY: Megan Martin, Community Development Director SUBJECT: Economic Development Update
RECOMMENDATION
Receive an update on key economic development initiatives and activities.
BACKGROUND
Economic development remains a top priority and is one of the City’s Major City Goals for FY 2023-25 (Attachment 1). As part of the FY 2024-25 budget, the Council continued with a strategic focus on economic development and staff established a work program for that goal (Attachment 2). The purpose of this update is to provide the Council with information about economic development initiatives and activities.
Business Retention and Attraction
Business Development and Support
The City is committed to strengthening and maintaining a business-friendly environment. Efforts toward this include focusing on business attraction, permit streamlining, and commercial development, especially along West Grand Avenue. Three mixed-use development projects along West Grand Avenue listed below have been approved by the Planning Commission since 2023 and will result in approximately 12,000 square feet of new commercial space along with 119 new residential units bringing in additional customers at local businesses. • 197 West Grand Avenue. This is a recently approved four-story mixed-use development including 2,500 square feet of commercial retail/restaurant space with an outdoor corner plaza at the corner of North 2nd Street and West Grand Avenue. The site will also be developed with 23 residential units including 16 townhomes and 7 condominium units. • 401 West Grand Avenue. Located at the corner of North 4th Street and West Grand Avenue, this four-story mixed-use development replacing a vacant used car lot is currently under construction and includes 6,900 square feet of commercial retail/restaurant space, and 59 new condominium units.
• 402 West Grand Avenue. Across from 401 West Grand Avenue and currently under construction is a four-story mixed-use building replacing a vacant lot and includes 2,600 square feet of commercial retail/restaurant space and outdoor public seating area. The site will also be developed with 37 new condominium units.
Staff Report: 2024 Economic Development Update Page 2
October 15, 2024
These developments, along with a 53-residential unit affordable housing project at 1206 West Grand Avenue, further the goals of the West Grand Avenue Master Plan and are consistent with the City’s Development Code to provide more vibrancy and activity in the heart of Grover Beach along the city’s main commercial corridor. The addition of the commercial space presents a particularly exciting opportunity and is designed to accommodate the expansion of existing businesses, such as restaurants and retail establishments, offering them room to grow within the city rather than seeking opportunities elsewhere. This new space also serves as a key asset for attracting new businesses to Grover Beach, providing modern, versatile locations that can meet the needs of diverse industries.
Lastly, the City would recognize the work of the South County Chambers of Commerce (Chamber) in supporting business attraction and retention in Grover Beach and the South County area. The City has a long-standing partnership with the Chamber which has numerous programs to support businesses including operating The Launch Pad business space at 391 Front Street. The Launch Pad has been in operation since 2022 and recently expanded into vacant space adjacent to the original space. The Chamber CEO will attend the Council meeting and can provide additional comments about The Launch Pad and other Chamber programs.
Local Business Investment Opportunities
As part of the most recent California Housing and Community Development (HCD) Notice of Funding Availability (NOFA) for the 2024 Community Development Block Grant, the Council approved an application for $1 million in Microenterprise Assistance Program loan funding to support low to moderate income (LMI) business owners. This funding would be administered by the City and provide qualifying applicants the opportunity to receive a low-interest loan for certain tenant improvements such as accessibility, plumbing, energy, and fire suppression and safety systems. The loan could also be used by business owners to support limited façade improvements, like new signage. If awarded by HCD, staff anticipates being able to use the grant funding to help up to 20 qualifying businesses. Staff will submit an application for the grant before the end of 2024 and the City should receive notification of award status after the first of the year.
For existing businesses, this program represents a chance to grow and modernize while keeping costs manageable through affordable financing. It also demonstrates the City’s continued commitment to fostering a supportive environment for business retention and expansion. By providing targeted assistance, the City is helping ensure that small qualifying businesses, which are the backbone of the local economy, have the resources they need to thrive.
Buy Local Program
The City has a long history of providing funding to support local businesses including grants to address COVID impacts and install outdoor seating, signage, and façade improvements along with Buy Local programs in partnership with the Chamber. Much of this funding came from onetime sources such as the American Rescue Plan Act funds along with some funding from the General Fund.
In July 2024, the City launched the fourth iteration of the Buy Local Program in partnership with the Chamber to support Grover Beach businesses affected by construction of the West Grand Avenue streetscape project. This initiative fosters local patronage and supports business resilience. Residents and patrons have been encouraged to shop at businesses within the construction area and receive a $25 gift card for every $100 spent at participating restaurants, breweries, wineries, or retail establishments on West Grand Avenue from Highway 1 to 10th Street.
Staff Report: 2024 Economic Development Update Page 3
October 15, 2024
As of October 6, the program has generated impressive results with submission of over 300 receipts with approximately $60,000 spent at eligible businesses. Compared to the City’s $15,000 investment for the purchase of gift cards and administrative costs for the Chambers to run the program, there has been a 5:1 return on investment of City funds. This ROI shows the program is effectively driving spending, with businesses impacted by the West Grand Avenue streetscape project receiving significantly more in economic activity than the value of the initial investment.
Given that the funding for this Buy Local program is fully expended, staff is preparing another program to support businesses along this section of West Grand Avenue. The City will launch a new “West End Business Bingo” game during November to further encourage patronage at businesses impacted by the construction along West Grand Avenue. Participants can obtain a Bingo card from the Community Services Division either in person at the Grover Beach Community Center or online by visiting the Community Services page on the City’s website. Each Bingo card will list businesses along West Grand Avenue and by visiting at least four businesses on the Bingo card and submitting proof of purchase via receipts to Community Services, participants will receive a custom sticker and will be entered into a drawing for Grover Beach prizes. Staff proposes to unveil this new program with additional information later in October.
Tourism Development
Tourism Marketing
Tourism plays a key role in Grover Beach’s economic development strategy. The City contracts with Verdin Marketing as part of the City-funded Visit Grover Beach tourism marketing initiative to boost tourism through tourism branding and marketing efforts. Through this work, there has been almost a 10,000% increase in followers to Visit Grover Beach social media platforms, increasing awareness of the City’s travel and tourism offerings and driving additional business to the City. Tourism continues to increase in Grover Beach given the city’s coastal location, food and beverage offerings, and proximity to numerous regional amenities. This increase in tourism is evident in the significant increase in the City’s Transient Occupancy Tax (TOT) revenue which reached a high of $953,685 in FY 2023-24. The City also continued to collaborate with regional partners like Visit SLO Cal and Regional Economic Action Coalition (REACH) to attract industries and investments that complement the local tourism economy.
Hotel Development
The City’s tourism marketing efforts align with the new hotel developments at 950 and 1598 El Camino Real which will expand lodging options for visitors and contribute to local revenue. The City anticipates the hotel at 950 El Camino Real will begin hosting guests in summer 2025. The proposed hotel at 1598 El Camino Real is currently in the permit review process.
The City continues its involvement in the Grover Beach Lodge hotel project, and supports California State Parks (State Parks) as the lead permitting agency on this private development located at Pismo State Beach. State Parks and the Joint Authority (State Parks and City of Grover Beach) issued a correction letter in Spring 2024 to the project developer requesting revisions to the parking lot design. The design team is working on plan revisions and responses while the developer has completed documentation to receive the Caltrans encroachment permit for certain improvements to Highway 1.
Staff Report: 2024 Economic Development Update Page 4
October 15, 2024
Ramona Garden Park Rehabilitation Project
Guided by the Ramona Garden Park Master Plan and adopted by the City Council in 2020, the Ramona Garden Park Rehabilitation Project is a series of planned improvements to revitalize the park in four phases. The project aims to create a more inviting, functional and inclusive space for the City’s annual summer concerts and other special events, drawing residents and visitors from other cities to this key community space. Recently, the City secured $3.3 million in CDBG grant funding for Phase 1 and 2 of the project. This will provide 90% of the needed funding for the project which will include an all-abilities playground, amphitheater, stage and bandshell, event lawn, new restrooms, re-designed walkways, benches, and picnic tables. The City has initially utilized General Fund reserves to bridge the approximately $400,000 funding gap for the project and will launch a community giving campaign effort later this year to provide an opportunity for residents, businesses, and others to contribute to this exciting project.
Commercial Cannabis Activities
Grover Beach is a leader in San Luis Obispo County for promoting and regulating commercial cannabis in a safe and responsible way. The City’s forward-thinking approach has fostered a thriving cannabis industry and has contributed to local economic development. There are currently nine cannabis businesses currently operating and generating jobs and tax revenue which helps support City services and projects. Most recently, two well-known retail companies (local SLO Cal Roots and statewide Catalyst Cannabis) moved into two of the existing retail spaces that were vacant. There are currently four cannabis retailers operating in the city including Urbn Leaf and Natural Healing Center in addition to the two listed above.
The City has averaged approximately $1.6 million in annual cannabis tax revenue since FY 2019-
20. The annual amount has decreased to approximately $1 million in FY 2023-24 given market and regulatory challenges faced by the industry including State licensing, federal legal uncertainty, and insufficient market penetration statewide. However, the cannabis industry continues to be an important source of general tax revenue for the City, contributing significantly to public services infrastructure and overall economic health.
Transoceanic Data Cables and Broadband Fiber
Grover Beach has positioned itself in the global digital economy with strategic partnerships for transoceanic cable infrastructure and broadband fiber. These cutting-edge technologies are transforming the city into a hub for international connectivity and attracting high-tech industry to support the local economy and business growth. Grover Beach is home to a strategic landing site for three and soon four transoceanic cables, which provide critical data links between North America and Asia. These cables offer high-capacity, ultra-low-latency connections that are essential for industries dependent on large-scale data transfers, such as tech, finance, and media.
The cables also provide ongoing funding to the City through an easement agreement. This places Grover Beach at the heart of global data traffic on the Central Coast, making the city an attractive location for data centers and tech companies seeking proximity to this infrastructure.
Related to high-speed data connections is the continued buildout of Astound’s citywide broadband network following the Council’s approval of a license agreement with Astound in March 2022.
Astound (formerly Digital West) has been installing broadband fiber in the city since 2017 as part of a public-private partnership with the City which will enable Grover Beach to be the first “gigabit” city on the Central Coast with high-speed fiber internet service offered to every residential and commercial property. Astound is nearing the end of its citywide buildout with final installation work underway now on certain streets in the southeast portion of the city.
Staff Report: 2024 Economic Development Update Page 5
October 15, 2024
Permit Streamlining and Process Improvements
Enterprise Permitting and Licensing
In 2023, the City contracted with Tyler Technologies to implement the Enterprise Permitting and Licensing (EPL) software. This strategic investment is a significant upgrade to the Community Development Department’s permitting process and is also a catalyst for economic development within the community. Some of the primary advantages of the new EPL software is its robust records management capabilities, the automated permit processing workflow, and a user-friendly interface for both applicants and staff. The software streamlines the submission, review, and approval processes. This efficiency means shorter wait times for businesses and developers looking to establish or expand their operations in Grover Beach.
The Community Development Department is taking a proactive step toward enhancing Grover Beach’s economic development framework for streamlined permit processing and anticipates rollout of the new software by the end of 2024. Staff is hopeful this alignment between technology and economic development will position Grover Beach as a leader in efficient permitting practices, benefiting both residents and the City’s local economy.
Development Code Amendments for Process Improvements
On September 9, 2024, the City Council adopted changes to the City’s Development Code.
Revising the Development Code will enhance process efficiency by clarifying requirements, reducing redundancies, and streamlining approvals. These improvements directly support the City’s transition to the new EPL software, creating a more cohesive and efficient permitting system.
By aligning code updates with the technology upgrade, the City will ensure faster, more transparent service for applicants and support ongoing efforts to boost economic development in Grover Beach. Once approved by the applicable State agencies, the changes will go into effect.
Staff anticipates consideration by the Coastal Commission by early 2025.
FISCAL IMPACT
There is no direct fiscal impact from this update.
ALTERNATIVES
The Council has the following alternatives to consider:
1. Receive an update on key economic development initiatives and activities; or
2. Provide alternative direction to staff.
PUBLIC NOTIFICATION
The agenda was posted in accordance with the Brown Act.
Attachments
1. Major City Goals FY 2023-25
2. Economic Development FY 2024-25 Work Program
City of Grover Beach
FY 2024-25 City Council Goals
MAJOR CITY GOALS
ECONOMIC DEVELOPMENT AND COMMUNITY PROMOTION. Strengthen and maintain a businessfriendly environment, implement strategies that build upon existing efforts in business retention with a focus on vulnerable sectors and populations, pursue business attraction and commercial development especially on West Grand Avenue, expedite permit processing, and promote tourism and hotel development.
HOUSING AND HOMELESSNESS. Work with developers and non-profits in efforts to increase housing availability with a focus on affordable housing; continue partnerships with regional agencies and organizations to address homelessness and related sheltering issues in the city and region, including supporting completion and operation of temporary shelter facilities in the City.
PUBLIC SAFETY. Ensure quality police, fire and emergency medical services by providing proper support, including implementation of a new fire services structure and funding, training and leadership development resources to meet service demands and growing challenges in such areas as homelessness, behavioral health, and social justice; and continue to engage with regional agencies, local businesses and the community in these efforts.
STREET MAINTENANCE AND COMPLETE STREETS. Continue to complete Measure K-14 street improvements on arterials and local streets; create a maintenance plan and related funding for improved streets; pursue opportunities to design and build safer, more pedestrian and bicycle friendly “complete streets” by incorporating where feasible bicycle lanes, sidewalks, street lights, crosswalks, trees/landscaping and other traffic calming design strategies.
OTHER IMPORTANT GOALS
BUILDING AND FACILITY IMPROVEMENTS. Support city programs, operations and assets by ensuring that our public facilities, including parks and buildings, are maintained, improved and expanded to meet community needs into the future; strategically develop priorities and funding plans by evaluating deferred maintenance, safety, health, accessibility, energy, and long-term needs.
COMMUNITY ENGAGEMENT. Continue a strong commitment to transparency and public participation in our city government through existing and new programs, initiatives and events designed to encourage community members, including youth, engagement in key community decisions; formalize our practices by adopting and implementing a public participation plan and policies.
WATER SUPPLY AND RESILIENCY. Meet existing and long-term water needs through by studying water resiliency alternatives and other regional efforts and by continuing water conservation; identify other feasible strategies to ensure long-term water resiliency.
ADDRESS AS RESOURCES PERMIT
CITY AND SCHOOL PARTNERSHIP. Establish a framework for communication between city officials and local public TK-12 education partners' that operate within the city supporting a Community Schools model that provide benefits for our youth, families, and the community 24/7 through more intentional alignment. Maximize each jurisdiction’s existing facilities and programs in partnership that benefits all, and discuss potential parallel policy options for shared adoption.
CODE COMPLIANCE. Prioritize the City’s code compliance program to quickly and effectively enforce our existing ordinances, including tree related issues like maintenance and removal permits.
ENVIRONMENTAL SUSTAINABILITY. Pursue carbon neutral solutions to develop a greener Grover Beach through plans, policies and City operations.
Attachment 1
MAJOR CITY GOAL FY 2024-25 WORK PROGRAM
ECONOMIC DEVELOPMENT AND COMMUNITY PROMOTION
GOAL STATEMENT
Strengthen and maintain a business-friendly environment, implement strategies that build upon existing efforts in business retention with a focus on vulnerable sectors and populations, pursue business attraction and commercial development especially on West Grand Avenue, expedite permit processing, and promote tourism and hotel development.
STAFF LEAD(S): Matt Bronson, City Manager; Kristin Eriksson, Assistant City Manager; Megan Martin, Community Development Director
TASK DATE
1. Continue to participate and collaborate with regional partner agencies to identify economic development strategies to support the local and regional economy.
July 2024
2. Work with the Chamber to conduct outreach with local businesses on key issues particularly along West Grand Avenue.
July 2024
3. Coordinate with regional partners and agencies, as well as the Chamber, to attract target industries and business sectors to the industrial area of the city.
July 2025
4. Facilitate opportunities with property owners and landlords to recruit and retain businesses
July 2024
5. Review the City’s Development Code and Economic Development Strategy for opportunities to remove barriers to economic development opportunities in Grover Beach.
July 2025
6. Continue oversight of construction for the mixed-use project at 402 West Grand Avenue and complete review for building permit issuance for mixed-use project at 401 West Grand Avenue along with coordination of opportunities for retail tenants.
June 2024
7. Coordinate development review process for other mixed-use projects along West Grand Avenue corridor.
June 202
8. Complete transition to a new permitting software system (Enterprise, Permitting, & Licensing), enhancing efficiency in permit processing and record-keeping practices.
December 2024
9. Work with outside communications firm to coordinate Visit Grover Beach tourism marketing communications.
June 2024
10. Continue oversight of construction for hotel project at 950 El Camino Real.
January 2025
Attachment 2
MAJOR CITY GOAL FY 2024-25 WORK PROGRAM
ECONOMIC DEVELOPMENT AND COMMUNITY PROMOTION
11. Process building permits for the 1598 El Camino Real hotel project upon submittal by the developer.
August 2024
12. Continue to collaborate with State Parks to assist the Grover Beach Lodge project toward building permit issuance.
January 2025
13. Develop updated Sign Ordinance for Council consideration following public outreach process businesses.
March 2025
14. Conduct outreach and regulatory oversight of the commercial cannabis industry and process development applications; including onsite consumption areas upon submittal
January 2025
KEY POLICY/OPERATIONAL ISSUES
• Ensure alignment and coordination among various economic development policies, strategies, and initiatives at the local and regional level to maximize impact. • Balance the need for regulations to protect public welfare with creating a businessfriendly environment that encourages investment. • Address gaps or deficiencies in infrastructure to support business growth in the community.
• Leverage partnerships between the City, businesses, non-profit organizations, and community stakeholders to drive economic development initiatives, share resources, and achieve common goals.
• Continued City’s involvement with regional economic development strategies to ensure community economic vitality in the future.
• Research and identify data-driven approaches to inform decision-making, identify trends, and evaluate effectiveness of economic development programs outlined in the Economic Development Strategy.
• Continue focus on hotel development projects and the commercial cannabis industry give economic activity and development opportunities along with additional tax revenues.