City of Sacramento
City Council - 5PM Report
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File ID: 2023-01650 3/12/2024 Consent Item 12.
Professional Services Agreement with Berkeley Strategy Advisors, LLC for Economic Gardening 2.0 Program Administration [Published for 10-Day Review 02/29/2024] File ID: 2023-01650
Location: Citywide
Recommendation: Pass a Motion 1) authorizing the City Manager or the City Manager’s designee to execute a professional services agreement with Berkeley Strategy Advisors, LLC (BSA) with an initial one-year term in the amount of $236,850 and up to four optional one-year extensions for a total not-to-exceed amount of $1,228,500 for the maximum five-year term; 2) authorizing the City Manager or the City Manager’s designee to execute each of the optional one-year extensions provided that sufficient funds are available in the budget adopted for each applicable fiscal year.
Contact: Lorrie Clark, Development Project Manager, 916-808-5448, [email protected]; Aubree Taylor, Development Project Manager, 916-808-7191, [email protected], City Manager’s Office of Innovation and Economic Development Presenter: None.
Attachments:
1-Description/Analysis
2-Economic Gardening 2.0 Program Administration Agreement Description/Analysis
Issue Detail: As a part of the FY2019/20 Fiscal Year Budget, Sacramento City Council approved a new 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).
Economic Gardening 2.0 involves two-phases, with the first phase focused 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.
File ID: 2023-01650 3/12/2024 Consent Item 12.
The second phase of the program includes a matching grant up to $50,000 to each participating business to support the implementation of a solution that is identified based on research results from the National Center for Economic Gardening (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 2020, Economic Gardening 2.0 launched its first cohort of six local Sacramento companies. Each of the six businesses faced unique challenges and opportunities that the program successfully addressed. Despite the onset of the COVID-19 pandemic, one year after the program all of the businesses reported steady or increased revenues and profits and 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 10 companies to participate. Each participating company reported growth opportunities for scaling up their company and eight out the ten have hired a Sacramento State University intern on a full or part-time basis. Companies represent a range of key Sacramento regional industries including technology, cleantech, publishing, supply wholesale and public relation firms. The participating executives include women and minority owned firms.
The pilot program boasted encouraging increases for participating companies in all three categories of key performance indicators (KPIs): revenues, profits, and new hires and therefore the city elected to continue the program beyond the pilot. The 16 businesses from cohorts one and two combined report increased revenues from $44.8M to $67.1M (over 50% increase) and have expanded by hiring more than 25 full time equivalents (FTEs). As a result, the City made the program ongoing and opened the application period for Cohort 3 in August of 2022. Ten companies were selected and are now in Phase 2 of the EG 2.0 program. All participating companies have shown strong export or regional market sales potential, a clear business vision, and the ability to contribute strategically to local economic growth. At this phase of the process each company is working on implementing grant projects.
This program has been administered with the help of BSA and NCEG. BSA is the primary point of contact for the businesses and works with them from the launch of the cohort through solution implementation. NCEG brings a team of seasoned researchers that leverage sophisticated corporate databases, Geographic Information Systems (GIS) mapping, Search Engine Optimization (SEO), and web marketing tools that provide corporate leadership with the marketing data and conclusions about critical issues for each company.
Since the City had not gone out to bid for the program administrator in 4 years, on October 2, 2023, the City released a request for proposals for the Economic Gardening Program Administrator, (#P24020014001) through the PlanetBids site. The City received 2 proposals. The review panel
File ID: 2023-01650 3/12/2024 Consent Item 12.
consisted of staff from the Office of Innovation and Economic Development and a Sacramento State University representative. BSA was the highest ranked respondent and staff is recommending they continue as the Program Administrator for the program.
If approved, it is anticipated that the application period for the fourth cohort of Economic Gardening
2.0 will begin in July 2024.
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 businesses. 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.
The Sacramento City Code Section 4.04.020 and Council Rules of Procedure (Chapter 7, Section E.2.d) mandate that unless waived by a 2/3 vote of the City Council, all labor agreements and all agreements greater than $1,000,000 shall be made available to the public at least ten (10) days prior to council action. This item was published for 10-day review on February 29, 2024, in compliance with City Code.
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. The program administration and business technical assistance for the businesses that participate in the Economic Gardening 2.0 program is vital to their success. This program has delivered positive economic impacts for the City, as evidenced by the reported KPIs (despite the brutal effects of COVID-19 on all business communities). Moreover, our cohorts continue to post considerable sales, profit, and new job growth. As an example of Economic Gardening 2.0's local impact, we have seen Cohorts 1 and 2 report an increase in staffing of 24 full time employees and 4 part time employees, an approximately 10% increase; and an annual revenue from $44,838,775 to $67,128,000, a significant improvement of over 50%.
Environmental Considerations: 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, it can be
File ID: 2023-01650 3/12/2024 Consent Item 12.
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 is committed to promoting environmental sustainability as a fundamental component of its inclusive growth strategy. This commitment is reflected in the program’s goal, which prioritizes sustainability for each participant. Cohort 3 stands out with the inclusion of two companies that actively contribute to the clean economy through specialized research on land and water resource preservation and supporting the development of clean energy devices. These companies exemplify the program’s commitment to fostering economic development while simultaneously embracing environmentally responsible practices.
Commission/Committee Action: Not applicable.
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. Cohorts 1-3 have evidenced that Economic Gardening
2.0 is an impactful investment and supports the growth of local small businesses. Continuing on with Economic Gardening 2.0 will allow the City to support additional local companies and help them thrive during the economic recovery.
Financial Considerations: The FY2023/24 adopted budget allocated $813,750 in the Economic Gardening Program multi-year operating project (I02184000) in the Innovation and Growth Fund (Fund 2031) for the Economic Gardening 2.0 program to fund both program administration and the matching grants for ten companies. Currently, sufficient funding is available to fund the first year of BSA’s contract in the amount of $236,850.
Due to the forecasted structural budget gap, the City Manager has directed City departments to minimize costs and for all new contracts to receive an additional level of scrutiny to ensure they are necessary for the operation of the City. This contract has been reviewed and approved by the City Manager’s Office to advance to Council for approval. Funding for the proposed contract beyond FY2023/24 is subject to Council approval.
Local Business Enterprise (LBE): Berkeley Strategy Advisors, LLC is an LBE.