City of Sacramento
City Council Report
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Sacramento, CA 95814
www.cityofsacramento.org
File ID: 2022-01359 8/9/2022 Consent Item 7.
Supplemental Agreement: Berkeley Strategy Advisors, LLC to Implement the Economic Gardening Program
File ID: 2022-01359
Location: Citywide
Recommendation: Pass a Motion authorizing the City Manager or City Manager’s designee to execute Supplemental Contract No. 2 to City Contract Number PRC001108 with Berkeley Strategy Advisors, LLC for an amount not-to-exceed $213,600 for a new total agreement not-to-exceed amount of $568,600.
Contact: Lorrie Clark, Development Project Manager, (916) 808-5448, [email protected]; Denise Malvetti, Deputy Director, (916) 808-7064, [email protected]; City Manager’s Office of Innovation and Economic Development Presenter: None
Attachments:
1-Description/Analysis
2-Supplemental Agreement
Description/Analysis
Issue Detail: As a part of the Fiscal Year 2019-2020 Budget, Sacramento City Council approved a new 2-year economic development pilot program called Economic Gardening 2.0. The program aims to explore innovative ways to support the scaling up and accelerated growth of second-stage companies (small businesses well-positioned to experience exponential growth, given appropriate support and resources). More specifically, Economic Gardening 2.0 involves two-phases. The first phase focuses on:
· performing intense market research and fact-based analysis, · ensuring that the participating companies can implement the recommendations, and · converting those findings into a sustainable business strategy to grow their businesses.
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File ID: 2022-01359 8/9/2022 Consent Item 7.
This program is administered with the help of Berkeley Strategy Advisors, LLC (BSA) (City Contract Number PRC001108). BSA was brought on to step in when the original Program Administrator’s contract was ended. An RFP was issued to fill this role, and BSA responded to the RFP and was awarded the contract. BSA partners with the National Center for Economic Gardening (NCEG) to provide research and analysis. NCEG's team of specialists consists of seasoned researchers that leverage sophisticated corporate databases, Geographic Information System (GIS) mapping, Search Engine Optimization, and Web marketing tools that provide the corporate leadership with market data and conclusions about critical issues for each company. Following 36 hours of research with the NCEG's specialists, companies continue to work with BSA to implement strategies emerging from NCEG's conclusions. . The second phase of the program includes a matching grant up to $50,000 to each participating business to support and assist with implementation options based on research results from the NCEG. In addition to receiving matching funds, the businesses are also given the opportunity to work with Sacramento State's Career Center to develop talent by hiring student fellows.
In January of 2020, Economic Gardening 2.0 launched its first cohort of six local Sacramento companies. The cohort's ownership reflects the diversity of our city, including women and minority owners. The industries of our selected companies are diverse as well, ranging from construction to manufacturing to professional services. Each of the six businesses faced unique challenges and opportunities that the NCEG and BSA successfully addressed. The pilot program boasts encouraging increases for participating companies in all three categories of key performance indicators (KPIs):
revenues, profits, and new hires. Despite the COVID-19 pandemic, all of the businesses have reported steady or increased revenues and profits, and they have added 18 jobs which are a combination of full-time, part-time, and student fellows.
In August of 2021, the City launched Cohort 2 and selected ten companies to participate. These local, second stage companies represent industries in advertising, marketing, media relations, consulting, and manufacturing. As this cohort comes to completion, each participating cohort has reported growth opportunities for scaling up their company. All participating companies are either (1) having a more successful year prior to the program; (2) holding steady through the lingering effects of the COVID-19 pandemic, or (3) they’ve bounced back to pre-COVID-19 production/output levels.
Additionally, in partnership with Sacramento State University Career Center, each company has committed to hiring Fellows from the program. To-date, eight out of the 10 have hired an intern on a full or part-time basis.
As Cohort 2 concludes, the City will be opening the application period for Cohort 3. The City will seek applicants that represent a broad range of industries, business types and a culturally diverse group of business owners. Due to the program’s positive outcomes, and the City's desire to continue providing much-needed support to small businesses coping with the ongoing economic impacts of the COVID-19 Pandemic, staff recommends continuing on to Cohort 3 and increasing the funding in City of Sacramento Page 2 of 4
File ID: 2022-01359 8/9/2022 Consent Item 7.
the amount of $213,600 to support the additional services of National Center for Economic Gardening and Berkeley Strategy Advisors.
Policy Considerations: On July 31, 2018, Council unanimously adopted a policy and resolution (Resolution 2018-0312) to take comprehensive, intentional actions to increase and diversify our economic growth in an inclusive and equitable manner. The program supports Council’s goals and objectives for fostering local economic growth through the provision of business technical services and access to capital for local disadvantaged business. Additionally, the program helps implement the goals of the City’s ScaleUp Sacramento initiative which supports opportunities for inclusive economic growth, adopted by Council on January 26, 2021.
Economic Impacts: Economic Gardening 2.0 provides opportunities for businesses that can result in greater economic growth. Companies have the potential to grow sales statewide and nationally, show great potential for growth in both revenue and employment, and demonstrate clear vison for leveraging the program to scale their business. Its focus on diversity, leveraging the fullest range of backgrounds within the community, reflects the idea that diverse businesses are better suited to solve market problems, promote, and harness innovation, and successfully respond to the cultural diversity of the marketplace.
Cohort 1 has completed the program and has demonstrated exceptional performance improvements.
Cohort 2 is positioned to exceed the expectations set by Cohort 1. Now in Phase 2 of Cohort 2, the EG 2.0 program boasts notable early performance statistics for participating businesses in all three key performance indicators (KPIs) categories: revenues, profit, and new hires. These early results are highly encouraging as they reflect the impact of the program’s business research and its business technical assistance is ongoing.
In terms of financial performance, all participating companies are either (1) having a more successful year than prior to the program; (2) holding steady through the lingering effects of COVID-19, or (3) they’ve bounced back to pre-COVID-19 production/output levels.
In terms of new hires, the Cohort 2 claims 11 new hires to date (including full-time hires, · part-time hires, and interns from Sacramento State).5 FTEs · 3 PTEs
· 5 Interns
In summary, there is no cohort member who is currently experiencing financial loss. Even in the worst case, the assisted companies are remaining steady, despite the effects of the pandemic on the economy.
Environmental Considerations:
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File ID: 2022-01359 8/9/2022 Consent Item 7.
California Environmental Quality Act (CEQA): This action is exempt from the provisions of the California Environmental Quality Act (CEQA), consistent with section 15378(b)(4) of the CEQA Guidelines, which provides that the creation of government funding mechanisms or other government fiscal activities that do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment are not to environmental review. Further, this action is exempt from CEQA because it can be seen with certainty that there is no possibility that this action may have a significant effect on the environment. (CEQA Guidelines section 15061(b)(3).)
Sustainability: The Economic Gardening program recognizes environmental sustainability is key to any inclusive growth strategy and addresses that as a goal with each participant.
Commission/Committee Action: None.
Rationale for Recommendation: The City Council has made clear, through multiple actions, its commitment to prioritize and implement strategies, programs, and projects that promote inclusive economic development throughout our City. To achieve this, the City must focus its support and investments to strengthen business capacities. Cohorts 1 and 2 have evidenced that Economic Gardening is an impactful investment and supports the growth of local small businesses. Continuing on with Cohort 3 will allow the City to support additional companies and help them thrive during the economic recovery.
Financial Considerations: The Economic Gardening 2.0 Program is funded by the Innovation and Growth Fund (Fund 2031). The Fiscal Year 2022-2023 budget allocated $775,000 for the Economic Gardening 2.0 program to fund participation of ten companies. Sufficient funding is available in the Economic Gardening Project (I020184000) to execute the supplemental agreement with BSA.
Local Business Enterprise (LBE): BSA is a Sacramento based business.
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