TO: COMMUNITY AND ECONOMIC FROM: Nanci Klein
DEVELOPMENT COMMITTEE
SUBJECT: BUSINESS DEVELOPMENT
AND SMALL BUSINESS UPDATE DATE: April 10, 2023
Approved Date
RECOMMENDATION
Accept staff’s status report on the activities of the Office of Economic Development and Cultural Affairs’ Business Development Division, including small business assistance, City Initiatives Roadmap COVID-19 Pandemic Community and Economic Recovery efforts, corporate engagement, and development facilitation.
BACKGROUND
The Business Development unit is one division within the Office of Economic Development and Cultural Affairs (OEDCA), which also includes Cultural Affairs, Real Estate, and work2future.
Historically, Business Development has focused its limited resources primarily on business outreach to attract, retain and expand major employers, boosting the City’s jobs and revenue base. Triggered by the COVID-19 economic shock in 2020, the Business Development unit pivoted to better serve the small business community, with a special focus on micro-businesses, immigrant entrepreneurs, and businesses located in historically under-resourced neighborhoods, many of whom were hardest hit by the pandemic. While San José businesses received more than $3.4 billion in emergency federal, state, and local loans and grants, more help was needed to stabilize and support the small-business ecosystem. Funding from the American Rescue Plan Act (ARPA) has created a unique, yet time-limited opportunity to invest in multilingual staff and projects and partnerships to ensure local businesses and commercial districts can emerge more resilient.
The Business Development unit boosts the business sector through its core service areas of outreach, policy development, economic analysis, partner collaboration, targeted businesssupport initiatives, development facilitation, and communications. After two years of pandemicinduced economic upheaval, 2022 saw a return to a changed normal. Public health conditions improved, consumer spending remained strong, and unemployment reached historic lows; CED AGENDA: 4/24/23
FILE: CC 23-093
ITEM: (d)2
4/14/23
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Subject: Business Development and Small Business Update
however, rising interest rates, accelerating tech layoffs, and stubbornly high inflation sapped business owners’ confidence and raised expectations of a looming recession.
This memorandum provides an update on Business Development activities over the last year and a look at the work ahead. At the same time, it provides a glimpse at the state of small and large businesses in San José. It is not a comprehensive examination of the City’s economic climate and outlook; that analysis will be provided as part of the FY2023-24 budget process.
ANALYSIS
Businesses play a key role in ensuring the City’s fiscal, social, and cultural health. Whether large or small, businesses provide jobs, generate tax revenue, and contribute to a sense of place and innovation within a community. In San José, a business ecosystem of roughly 60,000 establishments employs approximately 435,000 people. Within this portfolio, each type of business plays a valuable role. Small business tenants activate neighborhood business corridors and provide neighborhood services and identity. Entrepreneurship is often a pathway to wealth creation for under-resourced communities. Meanwhile, a relatively small number of large businesses - just 1,123, or 2% of all establishments in San José - employ a large share of the City’s workers. Larger businesses are also more likely to generate significant sales tax for the City. This is crucial because sales tax for FY 2022-23 is expected to generate nearly 20 percent of the City’s general fund, paying for City services such as police, fire, and roads.
Figure 1 below illustrates the distribution of businesses by size in San José. A key takeaway is that each council district hosts a significant number of businesses, with a tremendous base of small and micro-businesses. Another takeaway is that despite making up only 2% of total establishments, 35+-employee companies employ 65% of the City’s total jobs or 280,000 people.
Each size and stage of business has different concerns and needs; identifying these and effectively responding to them has been a main focus of the Business Development unit over the last 18 months.
Figure 1. Number of San José Businesses by Size and Council District Council
District
Sole
Proprietorship
Microbusiness
(2-9 FTE)
Small
business
(10-34 FTE)
Medium
and up
(35+ FTE)
Total
(% of total)
1 3,819 1,765 236 90 5,910 (10%)
2 3,055 1,076 104 60 4,295 (7%)
3 4,892 3,073 551 193 8,709 (14%)
4 3,073 1,964 468 298 5,803 (9%)
5 3,273 1,431 111 46 4,861 (8%)
6 5,568 3,165 523 189 9,445 (15%)
7 3,698 2,127 230 97 6,152 (10%)
8 3,394 1,233 83 28 4,738 (8%)
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Subject: Business Development and Small Business Update
Council
District
Sole
Proprietorship
Microbusiness
(2-9 FTE)
Small
business
(10-34 FTE)
Medium
and up
(35+ FTE)
Total
(% of total)
9 4,168 1,619 176 57 6,020 (10%)
10 3,825 1,548 149 65 5,587 (9%)
Total
(% of total
citywide)
38,795
(63%)
19,001
(31%)
2,631
(4%)
1,123
(2%)
61,520
(100%)
Source: San José Department of Finance/Business Tax Data Today, the Business Development unit consists of 15 positions. Eight of those are focused on neighborhood small business development, mostly in underserved parts of the City. Of those eight positions, four are time-limited and funded through the American Rescue Plan Act. The team includes a public information manager, development facilitation officer, housing catalyst officer, international programs manager, and staff economist. OEDCA also partially funds the Small Business Ally program, a concierge permit-assistance pathway for small businesses offered in English, Spanish, and Vietnamese that is housed within the Department of Planning, Building and Code Enforcement. The Business Development unit collaborates with work2future to educate the business community about workforce development programs for employers/employees and Rapid Response services during layoffs. work2future is the federally funded workforce investment board that serves a portion of the County of Santa Clara.
Over the last year, the Business Development unit began to transition to a new framework with staff members grouped into two primary focus areas: Small Business Support and Business and Development Facilitation Support. The Small Business Support team concentrates on local advocacy, neighborhood business district development, technical assistance support, resource referrals, and access to capital. The Business and Development Facilitation Support team consists of five people and is primarily focused on driving industry attraction/retention, Downtown vibrancy, strategic revenue generators, permit facilitation for major economic development projects, and increasing housing production. The overall goal of this structure is to serve multiple segments of the City’s business community effectively, recognizing the unique and valuable contributions of small, medium, and large employers and improving the City’s market position as an attractive place to do business. This is critical because San José is the only big city in America with a lower daytime population than a nighttime population. This lack of jobs within the City is a major driver of San José’s relatively weak tax base.
The COVID-19 pandemic revealed that the most vulnerable members of the business and workforce community often face systemic barriers to accessing services and resources. Informed by the experiences of the last three years, and with the support of City Council funding allocations, the team continues to focus on equity throughout Business Development priorities and activities. Over the last 18 months, Business Development recruited additional languagecompetent staff. Webinars, outreach, mailings, and most written content and collateral are routinely available in multiple languages (English, Spanish, Vietnamese, and simplified Chinese). More language-appropriate business assistance technical resources are being procured
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Subject: Business Development and Small Business Update
to serve small businesses, paying special attention to the needs of immigrant and women entrepreneurs. Equitable economic development also means having quality career pathways for all members of the community, which is why OEDCA works with local partners on workforce development initiatives supporting high-wage growth sectors like advanced manufacturing, health care, and computer-related fields that are accessible to residents without a four-year college degree.
The City’s COVID-19 Recovery Task Force, which met throughout 2022, has also played a key role in the City’s equitable business recovery strategy. The Task Force’s Supporting Small Businesses Committee developed strategies to support the City’s small business ecosystem and in December 2022, the City Council allocated $750,000 to Business Development initiatives that supported these strategies, described in more detail below.
The following analysis summarizes the Business Development unit’s work from July 2021 to March 2023, key accomplishments over this time, and a look at what is ahead.
1. Business Outreach Activities
Business outreach lies at the core of economic development and includes both proactive engagement and responsive communication. Outreach may be focused on a specific message (such as getting the word out about a grant or service), problem-solving, or an exploratory location conversation.
Corporate Recruitment/Retention Meetings: During FY2021-2022, the Business Development team met with approximately 300 corporate/investor representatives and is on track to meet with 350 during the current fiscal year. These meetings include formal attraction/retention conversations undertaken to maintain/develop relationships with existing or prospective employers and educate them on the City, regional labor market, permit processes, location opportunities, and available resources. They also include inbound requests for assistance navigating government procedures. These meetings are valuable in surfacing opportunities for the City and can serve as an early warning system for tenants facing a relocation decision out of San José. In these cases, staff aims to help the company find a location in the City of San José.
For example, Business Development staff has been meeting with Monarch Truck Center, a longtime family- and woman-owned business located in Little Portugal, since 2018, as the company’s home is in the path of the Bay Area Rapid Transit extension. Staff partnered with the company to assess multiple potential sites and assist in understanding the process and timeline for a relocation. In early 2023, the company acquired a location in North San José and is working through a permit process that will allow Monarch to remain in San José for years to come, retaining more than 50 jobs.
It is important that the City continue to support and facilitate large investments due to the outsized impact these companies have on jobs and revenue. In FY2021-22, the Business Development team attracted or retained 4,217 jobs, many of which resulted from work begun years earlier. For the current fiscal year, the team estimates approximately 3,600 jobs will be
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Subject: Business Development and Small Business Update
retained/attracted due to its work. One example is Olympus’s endoscope repair facility, which moved into a new facility in Edenvale in November 2022. This followed years of close collaboration with the company to find a new location for expansion and resulted in the retention of 668 jobs. In addition, for every one dollar spent on OEDCA business outreach, it is estimated to generate $2.50 through business retentions and attractions, mostly through midsize and strategic revenue generators such as some manufacturers, major retailers, and automobile dealers.
Selected corporate relocations and expansions during the current fiscal year included the following:
o ByteDance/TikTok moved into the Coleman Highline office project in December 2022. At 650,000 square feet, it is one of the largest leases of the last few years.
The company reports it will bring 2,500 jobs immediately and up to 4,000 when fully occupied.
o A growing cluster of advanced mobility, battery, and sensor companies landed or expanded in San José. This includes Quantumscape’s growth on Automation Parkway. The next-generation battery maker started in San José in 2011 with about 18,000 square feet and has grown to approximately 430,000 square feet in North San José, where they now employ more than 600 people. o EV manufacturer Nio expanded on Zanker Road with 200,000 square feet in early 2022. San José is their North American headquarters, with R&D, testing, and other operations. More than 200 workers are based in the City. o Archer Aviation leased 95,000 square feet on Tasman Drive for the production of their electric vertical takeoff and landing vehicle helicopter. Their headquarters is at 190 West Tasman, and their new production facility is down the street at 77 Rio Robles. Archer currently reports roughly 250 workers in the City. Sakuu, an Edenvale company out to revolutionize batteries using 3D printing, recently leased another 80,000 square feet not far from their existing headquarters. o Other companies signing leases for new space or renewing include: contract manufacturer Gener8 coming to Alviso; XP Power relocating to North San José from Sunnyvale; Comet Technologies and Kawasaki Robotics signing new leases to stay in North San José; and semiconductor company OnSemi consolidating three locations (Sunnyvale, Santa Clara, and San José) into one on Rose Orchard in North San José.
Business Walks (Biz Walks): The numbers noted above do not count the hundreds of owners and managers of primarily storefront businesses who met during the regular Business Walks undertaken by the Small Business Support Team. These casual “Biz Walks,” started during the pandemic and are designed to inform neighborhood businesses about resources and grant opportunities while answering questions and discussing concerns in English, Spanish, Vietnamese, and Mandarin. Staff focuses on shopping centers or commercial corridors with high concentrations of locally owned and immigrant-owned businesses. In Fiscal Year 2021-22, the Business Development Team undertook 19 business walks in all council districts reaching an estimated 380 businesses. From July 2022 to February 2023, the team visited 13 shopping
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Subject: Business Development and Small Business Update
centers/commercial corridors reaching 260 businesses. Biz Walks can integrate community partners and networking; in October 2022, the Business Development team joined the Monterey Corridor Business Association, consultant Community Strong Strategies, and local nonprofits such as Start Small Think Big and the San José Downtown Association to walk a section of the Monterey Road Corridor, spreading the word about the emerging association and survey businesses on their needs. The day included a networking event at Sims Metal Management so that business owners could get to know each other better.
Events: The improvement in public health conditions has allowed for the return of public events.
In November 2022, the Business Development team hosted a small business resource fair and networking event at the City Hall Rotunda featuring panel discussions and a resource fair that attracted more than 50 entrepreneurs and 15 business assistance providers. Also in November 2022, OEDCA partnered with the Small Business Development Center to host an Access to Capital Summit. The event brought lenders face-to-face with entrepreneurs and featured discussions about how to access financing opportunities and lending products. Based on the positive response to these events, the Business Development team is planning more events in 2023, including a networking and training program for Small Business Month in May.
2. Boost Biz San José
The Business Development team and its partners work to strengthen San José’s business ecosystem through several targeted initiatives. These initiatives – collectively referred to as Boost Biz San José – include small business support, development facilitation, manufacturing/semiconductor industry promotion, international business development, and employer assistance.
Small Business Support: Traditionally, OEDCA has acted as a convener of the BusinessOwnerSpace consortium of small-business assistance providers, but staff’s role was relatively limited. The COVID-19 pandemic revealed vulnerabilities in the local small business ecosystem and created an opportunity for Business Development staff to take a more active stance by leveraging new resources to serve small businesses. With funding allocated by City Council through the American Rescue Plan Act, over the last 18 months, OEDCA has ramped up efforts in the following areas:
• Support for Capacity Building Neighborhood Business Districts: A formal business association enhances a neighborhood’s economic resilience, but San José has relatively few neighborhood business associations. Staff engaged in community organizing to develop business associations along the Monterey Corridor and Tully Road and in Alum Rock Village, with more on the way. Staff is also working to improve coordination between existing business associations and the City through monthly meetings and a citywide operating plan. Where appropriate, staff is exploring potential property-based improvement districts to provide a dedicated funding mechanism for enhanced clean and safe services.
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Subject: Business Development and Small Business Update
• Strengthening the Small Business Ecosystem: Thanks to increased staff support, the City-led BusinessOwnerSpace network of business assistance providers has seen more partners participating, hosting regular meetings with specialist guests and offering enhanced coordination, referrals, and support for grants and opportunities to attract more resources. The current ecosystem of technical assistance providers has advised or supported more than 10,000 businesses in Fiscal Year 2021-22 with 13,000 expected in Fiscal Year 2022-23.
• Expanding Free Technical Assistance to San José Businesses: Technical assistance provides free or low-cost services to boost entrepreneurs’ skill sets. Last fall, staff ran a procurement process to make additional free resources available for underserved businesses. At least three service providers will provide support to San José small businesses through one-on-one consulting and workshops. Technical assistance subject areas will include new business formation, digital/social media marketing, access to capital, and financial planning. Contracts are currently being negotiated. This effort is being boosted by the COVID-19 Recovery Task Force, which provided $150,000 of federal ARPA funding to these efforts.
A success story this past year involved the Quetzal Gardens Business Center on Alum Rock Avenue. The City invested $75,000 of ARPA funds to assist in the September 2022 opening of the Center, led by the Latino Business Foundation and key partners Excite Credit Union and SOMOS Mayfair. In the past 12 months, the Latino Business Foundation with Santa Clara University’s My Own Business Institute team has advised, supported, or trained 700 San José small businesses.
• Enhanced Multilingual Small-Business Outreach: OEDCA recruited three multilingual staff, with capacity in Spanish, Vietnamese, and Mandarin, in early 2022.
These staff engage businesses through direct outreach and are spearheading various other projects referenced in this memorandum, including the Flea Market vendor assistance work, business association development, and technical assistance revamp. • Enhanced Promotion, Virtual and In-Person Events. At the onset of the COVID-19 pandemic, the Business Development team began producing multilingual webinars on topics related to emergency government loans and grants. As COVID-19 faded as a dayto-day concern, staff shifted the content to address topical issues related to small business. In Fiscal Year 2021-22, staff produced 12 webinars on subjects including crime prevention, marketing your business, childcare essentials, ensuring accessibility, and rent relief. So far in Fiscal Year 2022-23, staff hosted five webinars including doing business with the City and how to start a business. Looking ahead, webinars will continue to be part of the business development toolbox, and staff is exploring more in-person workshop opportunities as well.
• Small Business Ally program: This program’s two staff members assist small businesses through the permitting and construction process. In Fiscal Year 2021-22, the
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Subject: Business Development and Small Business Update
Small Business Allies assisted 1,442 San José small businesses including 420 whom they guided through required City permits. Program services are available in English, Spanish, and Vietnamese. For the current fiscal year through February, the Small Business Allies assisted 1,178 business customers. They also manage the Disabled Access Improvement Grant program, which offsets the costs of permit fees or hiring a Certified Access Specialist to make accessibility improvements.
• Financial Assistance: San José has limited resources, so direct financial assistance must be targeted to create the most impact. Three primary grant programs exist and are managed by Business Development staff:
Storefronts Activation Grants. The Storefronts Activation Grants Program provides grants to small, ground-floor businesses to activate vacant storefronts and enhance their exteriors. Through the approval of the Fiscal Year 2022-2023 Operating Budget, City Council allocated $500,000 in one-time funding for this program. Due to extensive outreach and engagement in the most affected zip codes recovering from the COVID-19 pandemic, demand has been vigorous. To meet the need, in December 2022, the COVID-19 Recovery Task Force recommended and the City Council approved allocation of an additional $300,000 in one-time funding for this program. All funds are anticipated to be allocated by June 30, 2023. So far, 30 businesses have been awarded grants totaling $500,000.
The three program descriptions of Storefronts Activation Grants are summarized in the chart below:
Grant Name Amount
(up to)
Allowed Use of Funds
Vacant
Storefronts
$15,000 Occupying a ground-floor retail/commercial
space. Space must be vacant for at least three
months prior to leasing.
Exterior
Improvements
$10,000 Enliven façade/add exterior amenities to a
ground-floor retail/commercial space
Parklet
Conversions
$25,000 Increase seating capacity. Priority given to
businesses interested in transitioning
temporary SJ Al Fresco program parklets to
permanent ones.
Commercial Rent Debt Relief Grants. While small businesses in the County of Santa Clara were assisted by an eviction moratorium (which ended in August 2021), commercial rent debt was not forgiven. In Fiscal Year 2022-2023, OEDCA launched the first phase of a $2.75 million program to help businesses struggling with outstanding rent or utility debt, up to $15,000 per business. Eighty businesses received this lifeline as of December 30, 2022. The program received additional funding of $300,000 through the City Council-approved COVID-19 Recovery Task Force Report recommendation. In March 2023, OEDCA launched
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Phase 2, with slightly adjusted criteria designed to make the program more accessible. Phase 2 awards are expected to begin in May 2023.
District 8 Business Grants. In 2022, then-Councilmember Sylvia Arenas sought and received $150,000 in City funding to support the small business ecosystem in District 8, which includes a high percentage of immigrant- and minority-owned businesses. Business Development staff has developed a framework for the grant program and will open applications in April. The program will provide microgrants of between $1,000 and $5,000 to businesses with up to 35 employees. • Development and Permitting Facilitation: One of the Business Development team’s core roles is to provide ongoing support during the entitlement and permit process for long-term development projects as well as quick-turnaround guidance on City processes, permitting and development pathways for developers, brokers and businesses. In Fiscal Years 2021-22 and 2022-23, the team has provided ongoing project assistance to larger developers with major projects in multiple locations including Westbank, Urban Catalyst, Boston Properties, and Jay Paul Company. This assistance runs the gamut from facilitation during the entitlement process and continues with troubleshooting during the building permit and inspection processes until final permits are issued and certificates of occupancy are received. The team also provides leadership and coordination between multiple City departments and various participating developers to support planning efforts such as the Park Paseo Park Avenue re-envisioning project.
The team assisted at least 60 businesses with quick-turnaround needs in Fiscal Year 2021-22 and is on track to assist 80 additional businesses in Fiscal Year 2022-23. Recent engagements include working with Rivian, Eataly, and QuantumScape to facilitate the opening of new San José locations. In the current fiscal year, the team has been working with Adobe, Nio, Amazon, Antora Energy, BD Bio, Cloud Kitchens, and Infinera.
In addition to commercial/industrial facilitation, Business Development is also focused on facilitating multifamily housing. In 2022, the team’s Housing Catalyst officer initiated monthly coordination meetings between OEDCA, Housing Department, Building Division, Public Works Department, and Fire Department to review affordable housing projects in the process of obtaining construction permits that will soon apply for tax credits.
• Manufacturing and Semiconductor Industry Promotion: Manufacturing represents San José’s largest employment sector, employing more than 50,000 people, or roughly 12 percent of all jobs in the City. Production jobs tend to be more accessible to residents without four-year college degrees while paying more than service-sector work and generally providing health benefits. These businesses also play a key role in maintaining Silicon Valley’s innovation ecosystem by keeping production capabilities local.
Manufacturing has been a bright spot in the economy over the last 18 months, with
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companies like Gener8, Quality Circuit Assembly, Network PCB, and All FAB Precision Sheetmetal leasing new space in San José.
OEDCA continues to work with the nonprofit SFMade Inc. on the Manufacture: San José initiative, which provides outreach, technical support, and workforce development initiatives for the sector. An example of this partnership includes the Computer Numerical Control Training Program offered at MetroEd, which aims to prepare adults for in-demand manufacturing careers working with high-tech industry machines. The 12- week course recently graduated its first cohort of six students and, with funding from work2future, will expand next year to provide capacity for additional students.
The Business Development team has also been exploring the needs of the City’s semiconductor industry in light of the passage of the Creating Helpful Incentives to Produce Semiconductors (CHIPs) Act. This federal legislation will provide over $50 billion to incentivize companies to invest in domestic semiconductor production and for R&D and workforce training initiatives. Though most chip production in the U.S. has been outsourced, San José retains numerous chip industry headquarters and R&D offices.
OEDCA staff has been meeting with industry representatives and stakeholders to better understand the opportunities for the City to support applications by companies for manufacturing projects in San José under this federal legislation, as well as the possibility of establishing a National Semiconductor Technology Center in the City. • International Business Development: A primary focus of the City’s international programs is the City’s Foreign Trade Zone #18, a federal program enacted by Congress nearly 80 years ago that enables companies the ability to reduce, delay, or exempt duties and tariffs on imported merchandise that is admitted into the Foreign Trade Zone. Staff worked with three local companies to create Foreign Trade Zones – Innovusion Inc., Epoch International Enterprises, and Prism Team Services of the East Bay – bringing the total operators within the Zone to ten. During the past year, the City has worked with several existing Foreign Trade Zone operators to add new sites to their Foreign Trade Zones, including Lam Research, Tesla, Bloom Energy, and RK Logistics Group. In calendar year 2021 (the latest reporting period), activity within the San José Foreign Trade Zone ranged from $10 billion to $25 billion and participant company exports totaled from $500 million to $1 billion. The San José Foreign Trade Zone ranks first among California Foreign Trade Zones in exports and the number of people employed in Foreign Trade Zone 18, in the range of 25,000 to 26,000, is considerably higher than other Foreign Trade Zones in the state.
• Employer Assistance: The City’s work2future program is a federally funded program that assists employers, job-seeking clients, as well as education and other partners to foster workforce development and improve the ability of residents in the greater San José area to meet the needs of businesses. work2future supports local employers with services in the areas of hiring, layoffs, and workforce development particularly those in growing industries that will provide long-term, well-paying careers to employees. An overview of
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work2future’s services and activities over the last year is available in a separate report provided to the Community and Economic Development Committee in April 2023.
3. Communications
The Business Development team communicates to various audiences through news media engagement, blog posts, social media, an e-newsletter, web pages and other appropriate channels. In fiscal year 2021-22, OEDCA published 28 blogs focusing on topics such as economic development-related policy, new business openings, development, events, and resources for business owners. The blog posts provided content for four quarterly issues of SJEconomy News, OEDCA’s e-newsletter, and also for OEDCA’s social media platforms:
Linkedln, Facebook, Twitter, and Instagram. This content development pace has continued into the current fiscal year, with two newsletters and four to six blog posts per month. Recently, the Business Development team has created original content to showcase our diverse community of business owners, with interviews and business profiles themed around Black History and Women’s History months. These profiles have helped increase engagement on OEDCA's platforms, including an increase in Instagram followers by more than 25%.
In November 2022, Business Development collaborated with business associations throughout the City to promote shopping locally for the holidays. This first-time initiative included a printed neighborhood map (and accompanying website) complete with tips on where to shop, dine, and explore unique activities in 12 business districts. The effort garnered much-needed media attention during the first truly post-COVID-19 holiday season. Numerous small businesses in the area expressed their excitement for the campaign and embraced the possibility of similar future endeavors.
4. Special Projects
Beyond the core Business Development services described above, Business Development staff play a significant role in several cross-functional projects with an outsized impact on the City’s economic and neighborhood-business ecosystem. These include:
• Flea Market Vendor Assistance and Transition Planning: In June 2021, City Council approved the Flea Market Rezoning Project to allow the redevelopment of the Berryessa Flea Market. At the direction of City Council, the Business Development team engaged with hundreds of small business owners at the Market to co-develop resources and future pathways for a post-Berryessa Flea Market future. These engagement efforts have been conducted in English, Spanish, and Vietnamese, to ensure that a diverse group of vendors can participate and provide input. This includes the creation of an Advisory Group that will begin meeting in May 2023 and eventually provide recommendations on the disbursement of the Vendor Transition Fund, established to assist market vendors to transition their business to a different location or format when the Berryessa site closes.
Furthermore, the City is partnering with the Mission Asset Fund nonprofit organization to establish a program that will provide business technical assistance and access to grants
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and loans to Berryessa Flea Market vendors, assisting them with planning and transitioning their businesses.
• Cannabis Equity Business Academy: In 2019, City Council authorized expanding the number of cannabis retail licenses with all ten new licenses being made available to individuals who have been disproportionately impacted by the War on Drugs. To support their successful startup, OEDCA is launching a Cannabis Equity Business Academy (CEBA) to provide mentorship, business education, financial planning, and community building. OEDCA staff issued a request for proposals in June 2022 for an academy provider and selected CalAsian. OEDCA Business Development staff has spent the last four months developing an online application, which debuted in February 2023. The program is currently expected to launch in May 2023 with slots available for up to 90 participants. The CEBA is funded by a grant from the California Governors Department of Cannabis Regulation.
• Five Wounds Urban Villages Study: The Business Development team is lending expertise to a collaboration among the City of San José, the Santa Clara Valley Transportation Authority, and community members to conduct a comprehensive design review of the six urban villages within the area that includes the planned BART station at 28th Street/Little Portugal. The study will cover in detail policies and case studies in tackling residential and small business displacement. The project includes extensive community consultation events supported by the team with a focus on building business engagement and addressing displacement throughout the development process. The final report will be presented to City Council in early 2024. • Contract Disparity Study: The Finance Department is conducting a disparity study to better understand how minority-, women-, disabled-, veteran-, and LGBTQ+- owned businesses participate in its contracting policies and practices. The business development team has been supporting this effort. The study aims to identify the barriers preventing diverse businesses from working with the City (or the City’s prime vendors) and identify how processes could be more accessible and inclusive for all San José businesses. The final report will be presented to City Council in fall of 2023.
5. Policy Work
Business Development supports the City’s advancement through policy development and analysis in the areas of economic development, land use, and housing in partnership with other City departments. Increasing the supply of housing at all income levels in San José is an important goal to keep a strong local economy. It is also required to continue to support small and large business development in San José. Since 2019, the Business Development unit has included a housing catalyst officer that focuses on housing policy and facilitation. This role coordinates the Housing Catalyst Team, which is an interdepartmental team that meets twice a month and is focused on the production and preservation of housing in San José. In 2022, the Business Development unit assisted with major policy topics related to housing including the
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following:
• Cost of Residential Development Report and Study Session: Produced an update report on the cost to build new multifamily housing in San José. OEDCA worked closely with the Housing Department to produce an additional report on the cost to build affordable housing in San José. This culminated in a City Council Study Session in November 2022 that included a panel from the Urban Land Institute. • Housing Element: Contributed to the formulation of the draft Housing Element, especially in the areas of constraints and development of the draft sites inventory. • North San José: Assisted with the development of the proposed housing strategy and land use framework within the Housing Element to increase affordable and market-rate housing in North San José.
• Downtown Residential High-Rise Program Extension: Secured City Council approval to extend the City’s current Downtown High Rise Residential Program, providing fee waivers and reductions for qualified residential high-rise buildings in downtown. • Housing Crisis Work Plan: Led the team effort to transition the Housing Crisis Work Plan to the newly created Housing Catalyst Team Work Plan that will be closely aligned with the City’s updated Housing Element.
• Commercial Linkage Fee (CLF): OEDCA supported the Housing Department in revisions to the City’s CLF. In March 2022, the City Council approved credit towards the CLF for commercial development that provides affordable housing and approved changes to the timing of payment of the CLF.
6. Looking Forward
The Business Development team’s work plan for the rest of Fiscal Year 2022-2023 is robust as staff ramps up on several fronts. This includes deploying additional consultants to drive the establishment of neighborhood business associations; building out technical experts to support business needs; establishing a new small business advisory committee to advise staff on existing and new program and policy initiatives; and upgrading OEDCA’s digital footprint with a refresh of the SJEconomy.com and businessownerspace.com websites. At the same time, the Business Development unit aims to continue to support large employers and strategic revenue-generators to ensure the City is adequately serving these key business anchors. Additional details on the team’s work plan are provided in Appendix A.
CONCLUSION
The City’s fiscal strength and neighborhood vibrancy relies on a strong business sector. While
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April 10, 2023
Subject: Business Development and Small Business Update
the last three years have been difficult for businesses of all sizes, and particularly small business, our business community has also shown itself to be incredibly resilient. OEDCA’s business development work plan is informed by these experiences, with time-limited funding through ARPA providing a once-in-a-lifetime opportunity to create a business ecosystem stronger than it was before.
/s/
Nanci Klein
Director of Economic Development
and Cultural Affairs
For questions, please contact Vic Farlie, Assistant to the City Manager, at (408) 535-8230 or Nathan Donato-Weinstein, Assistant to the City Manager, at (408) 535-8178.
Attachments:
Appendix A: 2023-24 Work Plan and Status Report
Appendix A: 2023-24 Work Plan and Status Report
Work Plan
Area
Description Status
Building the
Small Business
Ecosystem
Launch a Small Business Advisory Committee
to provide insights and recommendations to
OEDCA on the needs and priorities of the
Small Business Community.
Meetings expected to
begin in Q2 2023.
Revamp the businessownerspace.com
technical-assistance network’s website and
operations to enhance access and effectiveness.
The new website will be
commissioned in-line with
the review of
SJeconomy.com in the
second half of 2023.
Procure additional technical assistance
capacity through the development of contract
support in the areas of business formation,
social media marketing, access to capital and
financial planning.
Contractors have been
selected and contract
negotiations are being
finalized.
Direct
Financial
Assistance and
Access to
Capital
Support the stabilization of small businesses
that are behind on their commercial rent
through rent relief grants.
The current application
window closes on April 30
and 300 grant awards are
anticipated to be awarded
in 2023.
Support the small business community in
District 8 through the development of a
District 8 Small Business Grant program.
Grant applications
anticipated to open April
10 through May 30 with
35 awards to follow.
Offer storefronts grants to support businesses
moving into vacant storefronts, making
exterior improvements, or installing permanent
parklets.
Ongoing
Monitor and promote additional funding
opportunities, such as state microgrants,
current/future SBA lending products and
County programs.
Ongoing
Continue to support and promote disability
access compliance, including through current
and planned City programs such as the
Disability Access Grant Program.
Ongoing
Stronger
Commercial
Corridors
Support the formation of a community benefit
improvement district in Alum Rock.
Anticipate bringing ballots
to City Council in August
2023.
Support the continued development of the
Monterey Corridor Business Association
through technical assistance and engagement.
Ongoing; contract
extension under way for
second year of services
with consultant.
Support the continued development of the
Tully Road and Eastridge Business
Association through technical assistance and
engagement.
Ongoing; contract
extension under way for
second year of services
with consultant.
Publish an operational plan and launch
additional business association and propertybased improvement district formation efforts in commercial corridors throughout the City.
Competitive RFP
completed in late 2022 to
procure consultant
services. Now negotiating
contracts to bring on
consultants to assist in
Calle Willow, East Santa
Clara Street Corridor, the
Alameda, Alum Rock
Village and Winchester
Boulevard.
Support the PBCE-led Five Wounds Urban
Village review with a focus on addressing
small business displacement.
Currently underway. The
final report will be
completed in early 2024.
Continue the BizWalk initiative to target
primarily underserved commercial corridors
with information and resources.
Ongoing; now on a
biweekly cadence.
Continue to work with VTA to create a
business support program and Interruption
Fund for the BART Phase II project.
Work with VTA and
consultants to define and
fund the program in 2023
Stronger
Commercial
Corridors
(cont.)
Develop a Monterey Corridor digital hub to
promote the key commercial/industrial area
and centralize the work of the Monterey
Corridor Task Force.
Website to launch late
spring 2023.
Fill key staff positions that will impact placemaking and business development in key areas of the city, including a Downtown Manager
and Coordinator and Eastside Manager.
Recruitments underway
now.
Monitoring the
City’s
Economic
Health
New economic dashboard that will provide
more frequently updated data on the City’s
economic activity. This will help the City
better target populations and geographies for
enhanced outreach and service delivery.
Staff is working on a
digital dashboard with the
help of the Information
Technology Department
that will debut in Q2 2023.
Special
Projects
Flea Market Vendor Assistance: Working with
the vendor community to establish the councildirected Flea Market Advisory Group, as well as customized vendor assistance programs.
This includes the roll-out of a financial
training and assistance program in partnership
with Mission Asset Fund, a CDFI.
Advisory Group process
underway; targeting spring
2023 council approval.
Technical assistance
program with Mission
Asset Fund in contract
review.
Support local semiconductor companies’
access of CHIPS ACT funding to increase
R&D and production activity in the United
States.
Ongoing for the life of the
five-year initiative.
Support the Finance Department’s Disparity
Study to assist businesses to do business with
the city.
The final report will be
presented to City Council
in the fall of 2023.
Establish the Cannabis Equity Business
Academy in partnership with Cal Asian and
the Enterprise Foundation with open
enrollment for eligible residents in 2023.
The Academy will launch
in Q2 2023 with up to 90
placements available.
Housing Catalyst Team Work Plan: Present
first iteration of plan based on adopted
Housing Element to increase production and
preservation of housing.
Under development; will
be presented to CED in
June and Council in the
fall.