Brian Darby
Critique of the OEDCA Performance
Measures Audit
Community and Economic Development Committee -
August 24, 2026
Executive assessment
The City Auditor's report is a strong and useful audit. It identifies genuine weaknesses in the City Manager's Office of Economic Development and Cultural Affairs' performance-measurement system and appropriately recommends clearer definitions, better disaggregation, documented methodologies, reconsideration of short-term targets, and stronger requirements for outside data providers.
The audit examined the reliability, validity and usefulness of 39 performance measures in the Adopted Operating Budget and compared them with the Economic Strategy Work Plan and Growing Our Economy Focus Area.
The Auditor also found that OEDCA is actually tracking 73 unique performance metries, key results and goals across four reporting channels, with 50 of the 73 having been newly introduced for FY 2025-26 or FY 2026-27. That degree of change partly explains the problems the audit found.
The fundamental concern, however, is larger than documentation. San José needs to move from a system that primarily asks, "What did OEDCA do?" toward one that also asks, "What changed because of the City's intervention, how much did it cost, and how confident are we in that conclusion?"
That distinction is especially important for job creation, business retention, tax revenue, downtown foot traffic, workforce outcomes and economic-impact estimates for major sporting events.
1. A strength of the audit: it identifies a long-standing performance-management problem
The current audit should be viewed in historical context.
The Auditor notes that a 2009 City Manager/City Auditor performance-management white paper concluded that San José reported many performance measures but did not consistently use them to improve performance. The current report therefore addresses an issue that has existed in various forms for many years.
The current audit appropriately distinguishes simple reporting from actual performance management. Performance measures are most valuable when they support management and policy decisions rather than merely appearing in an annual budget document.
That distinction should become the Committee's principal test:
What decision would Council or management make differently because this particular measure exists?
If there is no clear answer, the measure may be informational, but it is probably not a genuine management measure.
2. There is some tension between calling the measures
"generally reliable" and the deficiencies the audit
documents
The Auditor reasonably concludes that most measures reviewed are useful and generally reliable.
But the detailed findings show substantial limitations that should temper how Council interprets that conclusion.
OEDCA does not currently maintain standardized documentation explaining how all measures are calculated. Teams instead rely on spreadsheets, trackers and formulas embedded in working documents. The Auditor warns that this can make accuracy dependent upon the knowledge of individual employees and create problems when personnel change.
Six key performance measures depend upon outside organizations without agreements adequately defining methodology or data reliability.
Those findings do not necessarily mean the currently reported numbers are incorrect. They do mean that reproducibility, comparability and long-term reliability have not yet been demonstrated as strongly as they should be.
The Committee should therefore distinguish between:
current numerical accuracy, which the Auditor generally found acceptable, and methodological reliability over time, where substantial improvement is still necessary.
3. The 5,000-job measure needs a much stronger attribution methodology
DEDCA's strategy calls for the City to assist in retaining, expanding or attracting 5,000 jobs. Th City's current Growing Our Economy material continues to use that obiective, with the update goal extending to June 2027.
This is a reasonable strategic objective, but the measure raises an important economic- development question:
What constitutes a job attributable to OEDCA?
receive credit for 800 jobs?
Likewise, "retained" employment is particularly difficult to establish. A company remaining in San José does not necessarily mean that every existing position was retained because of City intervention.
The methodology should distinguish among jobs that are:
new to San José;
expanded within an existing San José company;
retained following a demonstrable relocation risk;
announced or committed;
actually filled;
temporary versus permanent;
full-time versus part-time;
and still present after an appropriate period.
It would also be valuable to report wages or job-quality characteristics when possible.
This becomes particularly important because the broader San José-Sunnyvale-Santa Clara labor market is itself changing. BLS data indicate that metropolitan payroll employment in July 2026 was approximately 1.3% higher than a year earlier. Earlier BLS data showed the metro gaining approximately 17,600 jobs year-over-year through May 2026.
That is positive regional economic news, but it demonstrates why attribution matters: regional employment can increase substantially even if the City does nothing, and it can decline despite effective City economic-development work.
OEDCA should therefore report both the broader economic indicator and the subset for which the City has documented evidence of material involvement.
4. The $5 million tax-revenue target needs the same
treatment
The Auditor identifies an elementary but important problem: OEDCA's different tax-revenue measures do not consistently identify which taxes are being counted. Some measures specify sales, property, utility or business taxes while others simply refer to "tax revenue." Standardizing that language is necessary, but Council should ask for something more.
The City should distinguish:
gross revenue associated with assisted companies from
incremental revenue reasonably attributable to OEDCA's intervention.
Otherwise an existing company's normal tax payments can make an economic-development program appear successful even when the City's intervention had little or no causal effect.
For major business-development projects, the City should eventually be capable of reporting an approximate fiscal return:
incremental City revenue minus identifiable City incentives and program costs.
That would turn the measure into a much stronger management tool.
5. The $100 million major-event economic-impact measure should probably be redesigned rather than merely adjusted One of the most questionable measures is the percentage of major sporting events generating more than $100 million in economic impact.
The Auditor appropriately recommends determining whether that threshold should continue after the exceptional 2026 event cycle.
There is an even more basic question: Why is $100 million the right threshold? A $95 million net-impact event is not necessarily unsuccessful, while a consultant estimate of $105 million does not necessarily mean that the City received a strong fiscal return.
International guidance on event-impact analysis reinforces the Auditor's methodological concern.
OECD guidance recommends defining the geographic area precisely and accounting for deadweight, displacement, leakage and spending that would have occurred without the event. It also warns against inappropriate multipliers and double counting.
For San José's 2026 events, Council should request reporting that separates at least:
direct visitor spending;
indirect and induced impacts;
net new spending attributable to visitors from outside the region; hotel activity;
local sales and other City tax revenue;
City operating and security costs;
City subsidies or direct event expenditures;
and the assumptions and multipliers used.
A particularly useful result would be:
estimated net fiscal impact to the City of San José, separate from the much larger regional "economic impact" figure.
Those are very different numbers.
6. The external economic-impact methodology should be
established before the 2026 analysis is completed
This is where I would go further than the Administration's response.
The audit found that the City's Team San José agreement does not presently address the methodology for the new $100 million sporting-event measure. OEDCA was working with the San José Sports Authority and a consultant on a comprehensive analysis, but the Auditor could not determine whether that methodology would become an ongoing standard.
The Administration agrees with the recommendation but says it intends to refine expectations with external partners during upcoming contract renewals, with a target completion date of June 30, 2027.
For ordinary metrics, that may be reasonable.
For the extraordinary 2026 sports portfolio, however, methodology should be specified before the final economic-impact numbers are accepted, not after the fact.
Otherwise the City risks determining the rules of measurement after the result is already known.
The Committee should ask OEDCA to provide the methodology, geographic boundary, visitor- spending assumptions, multiplier, treatment of local attendees, treatment of displaced normal activity and City fiscal costs when the 2026 economic-impact report returns to Council.
7. Downtown foot traffic needs fixed geographic and
methodological definitions
The Auditor identifies four different terms for apparently overlapping downtown measurements:
"foot traffic," "pedestrian traffic," "pedestrian activity" and "visitors." More importantly, the City receives underlying foot-traffic information through the San José Downtown Association, but its agreement does not currently define the geographic parameters used in producing that data.
That is not merely semantic.
Changing a geofence by several blocks can materially change downtown visitation results.
Daytime and nighttime populations are also fundamentally different.
The City's 2025 downtown reporting illustrates why these boundaries matter. A Mercury News account of the City's downtown report said foot traffic increased about 7% over the year ending in April while downtown office vacancy remained approximately 29%. The report used a specific downtown boundary extending roughly from the Downtown West/Diridon area on the west to Fourth Street on the east and from Julian Street south to I-280.
The City should permanently document its geographic boundary, time periods, definition of a visit, treatment of repeat visitors, historical methodology changes and data vendor.
San José's own agreement with the Downtown Association already contemplates use of Placer.ai and Beacon Economics for expanded downtown analytics. This creates an opportunity to make the methodology transparent enough that future Councils can compare 2027, 2028 and 2030 with 2026 on an apples-to-apples basis.
8. Downtown foot traffic should not be treated as a
substitute for economic health
More people downtown is generally desirable, but foot traffic alone does not establish economic vitality.
The City's own Growing Our Economy material acknowledges continuing challenges involving commercial and office vacancy, business costs and perceptions of downtown quality of life.
The Committee should therefore view downtown performance as a basket of measures rather than a single pedestrian count.
Foot traffic should be evaluated alongside retail vacancy, office occupancy, business openings and closures, sales-tax performance, hotel activity, restaurant activity, residential population and public perceptions.
That would reduce the danger of declaring success because pedestrian activity increased while commercial fundamentals remained weak.
9. The Cultural Affairs findings demonstrate why
apparently simple measures still require quality control The public-art and survey findings are particularly persuasive examples in the audit.
The City's measure showing that 80% of its permanent public-art collection is in "good" to "excellent" condition remained at exactly 80% across actuals, targets, estimates and forecasts for five years. The Auditor also notes that OEDCA measures preservation but does not have a corresponding performance measure for commissioning new work even though new public artwork is a strategic objective.
A measure that never changes should prompt a basic management question: is performance remarkably stable, or is the metric not sensitive enough to describe what is actually occurring? Likewise, the City's event-organizer measure says respondents rated service "good or excellent," although the underlying survey did not use those response choices. The cultural-grantee measure relied in FY 2025-26 on survey information collected in FY 2022-23 because the survey had not subsequently been administered.
Those issues should be corrected quickly. They are not merely stylistic inconsistencies; they affect whether a reader can interpret the reported result literally.
10. Workforce reporting should emphasize durable
outcomes, not just service volume
The Auditor correctly notes that some workforce measures fail to distinguish clearly between Work2future/WIOA and SJ Works even though those programs serve different populations.
Clarifying the program name is appropriate.
But a stronger workforce scorecard would place greater emphasis on outcomes after program completion.
For example, internship completion is useful, but the larger policy questions are whether participants subsequently obtain employment, whether employment persists, whether earnings increase, whether participants enter career pathways and whether residents facing significant barriers are benefiting.
OEDCA already reports some longer-term employment information, so the foundation exists.
The goal should be to construct a coherent pathway:
enrollment → training/internship completion → placement → wages → 6- or 12-month retention/career progression.
That would provide Council with a much clearer picture of whether workforce spending is producing economic mobility.
11. Seventy-three separate measures may itself be a
management problem
The audit concentrates primarily on whether individual measures are useful and reliable, but the volume of reporting deserves attention.
OEDCA was tracking 73 unique metrics across four channels, and 68% were newly introduced.
A large measurement system can become difficult for Council, management and the public to interpret even if every individual measure is technically valid.
OEDCA should consider establishing a hierarchy.
At the top should be a relatively small set of outcome or "north-star" indicators describing whether San José's economy and residents are actually doing better.
Below those should be program performance measures that OEDCA can reasonably influence.
Below those should be operational workload indicators such as meetings, applications, assistance contacts and events.
This would make it harder to confuse a workload count with an economic outcome.
12. The Administration's acceptance of all five
recommendations is encouraging
The Administration agrees with every Auditor recommendation.
It plans to complete the standardized methodology documentation by December 31, 2026.
It proposes March 31, 2027 for the Cultural Affairs work, June 30, 2027 for standardization and disaggregation, June 30, 2027 for reconsideration of the major long-term targets, and June 30, 2027 for external-partner methodology requirements.
Those commitments are significant and warrant support.
There is, however, an apparent drafting issue worth clarifying. The Administration's response to Recommendation 1 says revised methodologies and benchmarks will be incorporated into the "2026-2027 Proposed Operating Budget," even though the response itself is dated August 2026 and FY 2026-27 is already underway.
The Committee should simply ask whether this was intended to refer to the 2027-28 Proposed Operating Budget or to an amendment/update to the current budget.
Overall conclusion
The Auditor's five recommendations should be approved.
The audit shows that OEDCA has substantially improved the alignment of its measurements with Council priorities, but the next stage should go beyond making terminology cleaner.
San José should require that its major economic-development metrics answer five questions:
What exactly is being measured?
What is the source and calculation?
What changed?
How much of that change can reasonably be attributed to City action? What did that result cost the City, and what benefit did residents or the General Fund receive?
If OEDCA builds its revised measurement system around those questions, this audit can become nore than a reporting cleanup. It can help finally accomplish the performance-management biective San José identified years ago: using data not merely to describe government activity but to improve decisions.
Suggested Committee direction
In addition to accepting the five Auditor recommendations, the Committee should ask OEDCA to return with an implementation framework that distinguishes workload, output, outcome and impact measures; establishes attribution rules for jobs and tax revenue; specifies the methodology for 2026 major-event economic-impact calculations before final results are accepted; establishes permanent geographic and methodological definitions for downtown foot- traffic reporting; and incorporates net City fiscal impact where feasible into major economic- development and event evaluations.*
*I used Al in helping organize and format this report.