San Diego Economic Development and Intergovernmental Relations Committee Meeting – April 26, 2018

The Economic Development and Intergovernmental Relations Committee of the San Diego City Council met on April 26, 2018, at 2:00 p.m. (approximate start) to consider four agenda items: the San Diego Tourism Marketing District (TMD) milestone report and supplemental funding request, amendments to Council Policy 900-12 (Business and Industry Incentive Program), a mid-year update from the Convention Center Corporation, and the Connect to Careers youth employment program update. The committee approved the TMD item with a condition, requested further refinements to the incentive policy, and received informational reports on the Convention Center and workforce program. Vice Chair Kirsey and Council Members Alvarez and Bree were present; Chair Ward presided.

Consent Calendar

• Approval of the minutes and committee record of actions from March 22, 2018, was approved by unanimous consent without discussion.

Public Comments & Testimony

• Martha Welch (non-agenda public comment) expressed concerns about the county’s handling of animal control, property taxes, and its relationship with the city, stating that the county expects cities to pay for services and that property tax sharing is unfair. Chair Ward acknowledged her perspective.
• Mark Cafferty (San Diego Regional EDC) spoke in favor of the incentive policy update, emphasizing the need to connect underserved communities to economic growth.
• Andy Hall (San Diego Workforce Partnership) supported the incentive policy, noting that programs change lives but policies transform communities, and offered to share cost allocation methodology.
• Dr. Peter Brunell (Center on Policy Initiatives) supported the direction of the policy but suggested using non-managerial median wages rather than area median income, and adding provisions for full-time work, healthcare, and paid leave.
• Karim Boris (Business for Good San Diego) urged prioritizing small businesses, investing in outreach and handholding, and aligning the policy with the Climate Action Plan.
• Lauren Grattan (Mission Driven Finance) called for clearer inclusive growth goals, argued that the incentive program should prioritize small businesses and women-, minority-, and veteran-owned firms, and noted that $10,000 is a small incentive for companies hiring 25 people.
• Villevan Sanjeintharath (Innovation City) emphasized that the process favors larger businesses with resources and requested that binational focus be recognized.

Discussion Items

• Item 1 – San Diego Tourism Marketing District Milestone Report and Supplemental Funding Request: Meredith Dibdin Brown (Economic Development) and Brian Hughes (TMD Executive Director) presented the report covering FY19–23, including a five-year retrospective and prospective review. Total TMD funds allocated through FY17 were $107.5 million, with an additional $34.5 million in FY18. The ROI through FY17 was 26:1. FY19 assessments are forecast to increase by 5%, generating about $45 million in available funds, of which $36.7 million is recommended for the San Diego Tourism Authority and $1.3 million for 12 other events (three new to San Diego). A supplemental request of $5 million from the $26 million prior-year litigation reserve was proposed to fund five programs: seasonal events, holidays, family marketing, active lifestyle, and the Mexican market. Council Member Alvarez requested that the “catastrophe reserve” be renamed “opportunity reserve,” which the TMD board agreed to. He also emphasized the need for funding diversity and outreach to new organizations. Vice Chair Kirsey asked about international marketing in conjunction with new flights. A motion to approve the staff recommendation and forward to full council, subject to a forthcoming city attorney analysis on litigation risk, passed unanimously.
• Item 2 – Council Policy 900-12 Business and Industry Incentive Program Amendment: Deputy COO David Graham and Eric Caldwell presented a complete rewrite of the 1993 policy, focusing on inclusive growth. Key changes: targeting base-sector firms creating 25 quality jobs (80–120% of area median income); four tiers with six menu options (workforce, education, location, sustainability, transportation, community investment); administrative approval for incentives under $100,000; mandatory butt-for analysis; clawback provisions; and public reporting within 30 days. City Auditor Andy Henna noted improvements but expressed concern that non-financial incentives (e.g., extensive technical assistance) were not covered. Committee members raised issues: the 25-job threshold may be too high for small businesses; the policy needs clearer weighting of community goals; and stakeholder outreach is necessary. Chair Ward proposed a motion to have staff continue working on the policy, incorporate feedback, prepare a draft resolution, and return to committee in June for potential council action in July. The motion passed unanimously.
• Item 3 – San Diego Convention Center Corporation Mid-Year FY18 Sales and Marketing Update: Chair Gil Cabrera, CEO Rip Rippateau, and Tourism Authority CEO Joe Tursey presented. Long-term sales (July 1–March) tracked about 860,000 room nights, on pace to exceed 900,000. Short-term sales (18-month window) were also on track. However, only 17% of dates through 2027 are available for large conventions and 8% for small conventions, leading to lost business (62–66% due to space/date issues). The building is effectively full at 77% occupancy. Competition from Anaheim, San Francisco, and Seattle is growing. The expansion (subject to November vote) is critical to accommodate demand. No action required.
• Item 4 – Connect to Careers Youth Employment Program Update: Andy Hall reported that youth disconnection in the county has decreased from 43,000 to 41,000, but San Diego has the highest rate (26%) for African American youth in the country. In 2017, the program placed 2,003 youth in paid work experience and trained over 6,000, surpassing goals. City funding ($480,000 general fund and $375,000 CDBG) leveraged additional investments from the Irvine Foundation, Bank of America, and others. The 2018 goal is 3,000 placements. A new city mentorship program has placed 200 youth in city jobs. Council Members praised the program and urged the county to increase its investment. No action required.

Key Outcomes

• Tourism Marketing District: Approved (unanimous) to forward to full council with a recommendation of approval, subject to city attorney analysis of the $5 million supplemental request from the litigation reserve.
• Council Policy 900-12 Amendment: Motion passed (unanimous) to have staff continue refinement, conduct stakeholder outreach, and return with a revised policy and draft resolution for the June committee meeting, with a target of full council consideration in July.
• Convention Center Update: Received as information; no vote taken.
• Connect to Careers Update: Received as information; no vote taken.